Age Structure and Demographic Dividends: How Much Do Households Contribute to China's Economic Growth?

Abstract

Abstract In this paper, we investigate how much Chinese households have contributed to China's economic growth between 1980 and 2015 from the perspective of age structure transitions. We first propose a theoretical framework for the quantification of the demographic dividends during an age structure transition. Then we utilize China's country-level data from 1980 to 2015 to quantitatively measure the economic growth rate that is driven by the demographic dividends. Empirical results indicate Chinese children generation possesses the strongest consumption capability, while the elderly has the weakest. Since China's children dependency ratio has been declining between 1980 and 2010 while the elderly dependency ratio increasing, Chinese age structure transitions lead to both the increase of labor supply and the households savings rate, positively contributing to China's economic growth in most of these years. Moreover, Chinese demographic dividends vanished in 2012, since when China has entered the periods of demographic burdens.