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Demographic transitions and global sourcing: Firm-level evidence from China

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  • Li, Jie
  • Zhao, Yaohui
  • Bao, Yangming

Abstract

The study investigates how local population aging impacts firms’ global sourcing strategies. Using data on Chinese listed manufacturing firms from 2002 to 2016, we find that firms significantly increase their import activities—particularly for intermediate inputs—when local population ages. Further analyses indicate that labor market challenges and intensified competition are key mechanisms driving this response. Moreover, global sourcing emerges as an effective adaptation strategy, evidenced by improved financial performance. These findings offer new insights into how firms mitigate labor market challenges posed by aging demographics by leveraging global sourcing.

Suggested Citation

  • Li, Jie & Zhao, Yaohui & Bao, Yangming, 2025. "Demographic transitions and global sourcing: Firm-level evidence from China," Economic Modelling, Elsevier, vol. 150(C).
    • Handle: RePEc:eee:ecmode:v:150:y:2025:i:c:s0264999325001257
    DOI: 10.1016/j.econmod.2025.107130
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    Keywords

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    JEL classification:

    • F1 - International Economics - - Trade
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • D2 - Microeconomics - - Production and Organizations

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