The impact of delayed retirement on labor employment, fertility rate and economic growth in China

Abstract

This study assessed Chinese delayed retirement policy's impact on labor force employment, fertility, and economic growth using three models, emphasizing its implications for sustainable development. The first model, using a DID approach with OECD data and validated by PSM-DID, showed that delayed retirement reduced overall labor force participation by 0.14 percentage points and young labor force participation by 0.22 percentage points in the short term, with male manual laborers' unemployment rate increasing by 2.4 %. The second model, using OLS and negative binomial regression, revealed that delayed retirement significantly reduced children's fertility intentions by 0.04 children on average when mothers delayed retirement. The third model, an OLG model, indicated that a five-year delay in retirement reduced fertility by 0.089, savings by 0.13 %, and youth labor supply by 6.15 %, while increasing bequest income by 13.96 % and decreasing intergenerational caregiving time by 2.49 years. Additionally, per-child educational investment declined by 3.42 %, and average economic growth fell by 0.07 %. These findings suggested that delayed retirement reduced intergenerational caregiving, increased childcare burdens for the young, and hampered economic growth, all of which have significant implications for sustainable development. Our models highlighted the need for balanced policies that supported economic sustainability while mitigating adverse social impacts and ensuring the sustainability of social well-being.