Export contraction and input switching in an aging China

Feifei Wu, Peipei Xu, Bo Gao and Jing Ma

China Economic Review, 2024, vol. 85, issue C

Abstract: Whether an aging China is increasingly losing its low-cost export advantages? More importantly, which type of inputs' dynamics occurs to adapt to the above-mentioned circumstance? Using an instrumental-variable strategy, our empirical analysis finds that population aging leads to a contraction in China's export share since it causes a shortage of middle-aged workers and thereby higher labor cost. We also show that population aging leads to a substitution of labor with capital, but does not promote technology level in the context of China. Moreover, we document that the substitution of labor with capital occurs mainly in the firms with high productivity, large scale, high capital intensity, low credit constraint, high export intensity and private firms.

Keywords: Population aging; Export contraction; Labor cost; Input switching (search for similar items in EconPapers)
JEL-codes: F14 F16 J11 J21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:85:y:2024:i:c:s1043951x24000543

DOI: 10.1016/j.chieco.2024.102165

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