Does low birth rate affect China’s total factor productivity?

Xiang Li and Xindong Zhao

Economic Research-Ekonomska Istraživanja, 2022, vol. 35, issue 1, 2712-2731

Abstract: This study uses the DEA-Malmquist method to measure total factor productivity by employing the provincial panel data from 1998 to 2017 in China and constructing a panel data model to test the relationship between birth rate and human capital and the influence of labour in different age groups on total factor productivity. It was found that the increase in the birth rate has a significantly negative effect on human capital accumulation, while the effect of the birth rate on human capital shows an inverted ‘U’ shape. That is, when birth rate decreases, human capital increases, and when birth rate increases, human capital decreases. Thus, too low or too high birth rates will reduce human capital. Ultimately, human capital accumulation will significantly promote the growth and decomposition of total factor productivity. The effect of the labour age structure on total factor productivity also shows an inverted ‘U’ shape. Labour between 40 and 49 years old contributes the most to the promotion of total factor productivity. Eventually, due to the low birth rates, the proportion of 50-59 years old will keep at high level. Therefore, total factor productivity will decline significantly.

Date: 2022
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DOI: 10.1080/1331677X.2021.1977671

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