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Effective labor supply and growth outlook in China

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  • Cao, Jing
  • Ho, Mun S.
  • Hu, Wenhao
  • Jorgenson, Dale

Abstract

The falling projections of working-age population in China has led to predictions of much slower economic growth. We consider three mechanisms that could contribute to higher effective labor supply growth: further improvement in educational attainment due to cohort replacement and rising college enrollment; improvement in aggregate labor quality due to urbanization; and higher labor force participation due to later retirement. We find that these factors result in a projected growth rate of effective labor input of 0.40% for 2015−2030 compared to −0.60% for working age population. As a result, the projected growth rate of GDP will be 5.80% for 2015–2030 compared to 5.23% if these factors are ignored.

Suggested Citation

  • Cao, Jing & Ho, Mun S. & Hu, Wenhao & Jorgenson, Dale, 2020. "Effective labor supply and growth outlook in China," China Economic Review, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:chieco:v:61:y:2020:i:c:s1043951x19301592
    DOI: 10.1016/j.chieco.2019.101398
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