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China's low fertility may not hinder future prosperity

Author

Listed:
  • Guillaume Marois

    (Asian Demographic Research Institute, Shanghai University, Shanghai, China; Wittgenstein Centre for Demography and Global Human Capital, University of Vienna–VID/ÖAW–International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria)

  • Stuart Gietel-Basten

    (Division of Social Science, The Hong Kong University of Science and Technology, Hong Kong SAR, China)

  • Wolfgang Lutz

    (Wittgenstein Centre for Demography and Global Human Capital, University of Vienna–VID/ÖAW–International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria)

Abstract

China’s low fertility is often presented as a major factor which will hinder its prosperity in the medium to long term. This is based on the assumed negative consequences of an increasing old-age dependency ratio: a simplistic measure of relative changing age structures. Based on this view, policies to increase fertility are being proposed after decades of birth restriction policies. Here, we argue that a purely age structure–based reasoning which disregards labor force participation and education attainment may be highly misleading. While fertility has indeed fallen to low levels, human capital accumulation has been very strong—especially among younger cohorts. Factoring in the effects of labor force participation and educational attainment on productivity, a measure called “productivity-weighted labor force dependency ratio” can more accurately capture the economic implications of demographic change. When using this ratio, a much more optimistic picture of the economic (and social) future of China can be envisaged.

Suggested Citation

  • Guillaume Marois & Stuart Gietel-Basten & Wolfgang Lutz, 2021. "China's low fertility may not hinder future prosperity," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 118(40), pages 2108900118-, October.
    • Handle: RePEc:nas:journl:v:118:y:2021:p:e2108900118
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