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The Second Demographic Dividend as a Driver of China's Growth

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  • Fang Cai

Abstract

As China's demographic transition enters a new stage, the “first demographic dividend” – the economic advantage resulting from demographic changes in recent decades – is bound to disappear permanently. China's future development will be characterized by an aging population. The “second demographic dividend” refers to new sources of economic growth derived from this later population change. This paper reveals major constraints caused by aging in China, which is characterized by a tendency to grow old before becoming rich. As the population ages, human capital improvement slows, labor force participation declines and consumption power reduces. This paper suggests taking advantage of a population “echo effect” to improve human capital at all ages, to enhance workers’ ability to benefit from employment, and to improve the labor participation rate of the elderly, which in turn would increase the income and social security of the aged. These measures are conducive to future economic growth and to the cultivation of the second demographic dividend.

Suggested Citation

  • Fang Cai, 2020. "The Second Demographic Dividend as a Driver of China's Growth," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(5), pages 26-44, September.
    • Handle: RePEc:bla:chinae:v:28:y:2020:i:5:p:26-44
    DOI: 10.1111/cwe.12350
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    References listed on IDEAS

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    1. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2012. "When Fast-Growing Economies Slow Down: International Evidence and Implications for China," Asian Economic Papers, MIT Press, vol. 11(1), pages 42-87, Winter/Sp.
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    4. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2013. "Growth Slowdowns Redux: New Evidence on the Middle-Income Trap," NBER Working Papers 18673, National Bureau of Economic Research, Inc.
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    6. David E. Bloom & David Canning, 2006. "Booms, Busts, and Echoes: How the biggest demographic upheaval in history is affecting global development," PGDA Working Papers 1506, Program on the Global Demography of Aging.
    7. Erik Hurst, 2008. "The Retirement of a Consumption Puzzle," NBER Working Papers 13789, National Bureau of Economic Research, Inc.
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    Cited by:

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    3. Lingdi Zhao & Minghui Lu & Haixia Wang, 2024. "Research on the Effect of the Healthy Cities Pilot Policy on the Labor Supply Time of Middle-Aged and Elderly Workers in China," Sustainability, MDPI, vol. 16(19), pages 1-22, October.
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