How and to what extent has the demographic dividend affected China’s economic growth?

Kazuki Taketoshi ()
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Kazuki Taketoshi: Ryukoku University

International Journal of Economic Policy Studies, 2020, vol. 14, issue 2, No 5, 337-350

Abstract: Abstract This paper aims to clarify how and to what extent the demographic dividend has affected China’s economic growth. China has experienced rapid demographic transition since the 1970s, as the working-age population has increased, and the dependent population ratio has decreased. Such demographic transition provides favorable conditions for economic growth, thereby producing economic fruits referred to as the "demographic dividend", which are considered to include two economic effects: the “labor effect” and the “capital effect”. The results of previous studies and a simple analysis of macro data confirm that China’s demographic dividend long exerted more of a "capital effect" on economic growth than a "labor effect". In other words, the decreasing dependent population ratio elevated the savings rate, and the increasing working-age population increased total savings, which were used for investment in physical capital. The growth of physical capital was the main engine for China’s economic growth. However, in the 2010s, the decreasing working-age population and the increasing dependency ratio reduced the savings rate and lowered the capital formation rate. The "capital effect" of the demographic dividend is no longer a strong driving force of the Chinese economy.

Keywords: Demographic transition; Demographic dividend; Economic growth; Growth accounting; Capital growth; China (search for similar items in EconPapers)
JEL-codes: J11 O11 O47 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s42495-020-00040-3

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