Population aging and intensified economic downside risk: Evidence from China

Abstract

This study investigates the impact of population aging on economic downside risk in China, providing new evidence on the consequences of aging in the literature. While previous research has shown the negative impact of population aging on economic growth, the relationship between aging and downside risk remains unclear. Using data from Chinese provinces (2000–2022), we employ Growth at Risk framework to measure provincial economic downside risk and explore the impact of population aging on it. We find that population aging significantly intensifies economic downside risk, particularly in regions with lower population scale or higher economic development. The intensified economic downside risk is driven by reduced technological innovation, higher fiscal deficits, and slower consumption growth. Additionally, population inflows are found to alleviate the economic risk. These results highlight the necessity of mitigating economic downside risks via coordinated measures addressing innovation, consumption, and fiscal deficits in aging societies.