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The role of demographics and migration for the future of economic growth in China

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  • Juan Carlos Conesa
  • Yan Wang

Abstract

China's real GDP has been growing by almost 10 percent a year for the last three decades. For how long should we expect this spectacularly high growth to continue? We evaluate in a quantitative two sector model with segmented labor markets and nancial frictions the prospects for China's future growth under different policy scenarios. In our model the high growth rate observed in China since the early 1990s is fueled by the large increase in urban labor supply, because of rural-urban migration, and the emergence of private enterprises that absorb those migrant workers. Our simulations suggest that the rapid aging of its population will signicantly decelerate urban labor force and economic growth starting around 2040. In a counterfactual exercise we show that substantial relaxation of labor market segmentation and nancial constraints faced by private enterprises cannot compensate for that deceleration.

Suggested Citation

  • Juan Carlos Conesa & Yan Wang, 2020. "The role of demographics and migration for the future of economic growth in China," Department of Economics Working Papers 20-08, Stony Brook University, Department of Economics.
  • Handle: RePEc:nys:sunysb:20-08
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    References listed on IDEAS

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    1. The role of demographics and migration for the future of economic growth in China
      by Christian Zimmermann in NEP-DGE blog on 2020-07-28 03:33:58

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