Demographic structure and economic growth: Evidence from China

Abstract

This paper examines the economic implications of demographic change in the Chinese context. We extend the growth equation by incorporating age structure dynamics and apply it to China's provincial-level data during the period 1989-2004. We find that changes in demographic structure, especially the contribution of fertility decline to lower youth dependency, have helped fuel China's economic growth since 1989. The effect of demographic change on income growth operates mainly through its impact on steady state income levels and the effect of age structure is more pronounced in provinces that are more open to market forces. We also find a significant feedback effect of economic growth on demographic behaviors through the mechanisms of birth rates, marriage age and life expectancy.