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Population aging, consumption budget allocation and sectoral growth

Rui Mao and Jianwei Xu ()

China Economic Review, 2014, vol. 30, issue C, 44-65

Abstract: This paper assesses the heterogeneous effects of population aging on personal budget allocation across sectors. Using China's household survey data, we break down each household expenditure component into its constituent members. We find consistent and robust age profiles of the composition of personal consumption expenditures. Young people spend larger proportions of their budget on food and education, culture, and recreation services. The middle-aged spend significantly more on clothing and transportation and communication. Lastly, the elderly spend substantially more on food and health care and medical services. After controlling for period and cohort effects as well as other socio-economic factors, we still find age to be a fundamental driver of consumption budget allocation. We also incorporate the estimated results into the population forecast data and predict the evolution of China's consumption budget allocation patterns driven by demographic change.

Keywords: Personal budget allocation; Population aging; Unbalanced growth; Age effect; Domestic consumption (search for similar items in EconPapers)
JEL-codes: D12 E21 J11 O14 (search for similar items in EconPapers)
Date: 2014
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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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