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Economic Implications of China's Demographics in the 21st Century

  • Kevin C. Cheng
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    This study assesses the economic implications of China's changing population in the 21st century using a numerical general equilibrium model. The simulations show that lower fertility rates yield lower saving rates. Since lower fertility rates reduce the future supply of labor, capital will become less productive. Consequently, if international capital mobility is high in China, a low fertility rate implies more future capital outflows. But if capital is less mobile, low fertility today lowers the domestic return to capital and raises the domestic return to labor. In addition, the paper finds no significant link between demographic structures and per capita income growth.

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    Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/29.

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    Length: 31
    Date of creation: 01 Feb 2003
    Date of revision:
    Handle: RePEc:imf:imfwpa:03/29
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    1. Johnson, D. Gale, 1999. "Population and economic development," China Economic Review, Elsevier, vol. 10(1), pages 1-16.
    2. Robin Brooks, 2000. "What Will Happen to Financial Markets When the Baby Boomers Retire?," IMF Working Papers 00/18, International Monetary Fund.
    3. Barro, R.J. & Becker, G.S., 1988. "Fertility Choice In A Model Of Economic Growth," University of Chicago - Economics Research Center 88-8, Chicago - Economics Research Center.
    4. Robin Brooks, 2000. "What Will Happen To Financial Markets When The Baby Boomers Retire?," Computing in Economics and Finance 2000 92, Society for Computational Economics.
    5. Razin, Assaf & Ben-Zion, Uri, 1975. "An Intergenerational Model of Population Growth," American Economic Review, American Economic Association, vol. 65(5), pages 923-33, December.
    6. Alan J. Auerbach & Laurence J. Kotlikoff, 1981. "An Examination of Empirical Tests of Social Security and Savings," NBER Working Papers 0730, National Bureau of Economic Research, Inc.
    7. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
    8. Bakshi, Gurdip S & Chen, Zhiwu, 1994. "Baby Boom, Population Aging, and Capital Markets," The Journal of Business, University of Chicago Press, vol. 67(2), pages 165-202, April.
    9. Steven A. Symansky & Peter S. Heller, 1997. "Implications for Savings of Aging in the Asian “Tigersâ€," IMF Working Papers 97/136, International Monetary Fund.
    10. Ríos-Rull José-Víctor, 2001. "Population Changes and Capital Accumulation: The Aging of the Baby Boom," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(1), pages 1-48, May.
    11. Alwyn Young, 2000. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," NBER Working Papers 7856, National Bureau of Economic Research, Inc.
    12. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
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