A Study On The Impact Of Population Aging On Corporate Investment Behavior

The demographic factor is a major issue that affects the long-term economic growth and social development.At present,China's population aging is at a stage of rapid development.According to the Seventh National Population Census data,the number of people aged 60 and over in China has reached nearly 264 million,and its ratio in the total population has rapidly increased from 13.32% in 2010 to 18.70%.According to United Nations' projection,this ratio will rise to 20% in 2025 and further rise to 35% to 40% in 2050.The aging population will have a profound impact on all areas of economic development.Therefore,how to actively respond to the negative impact of aging population has become a major practical issue that we are facing,and developing labor substitution technology is a key solution.However,Chinese economy is facing challenges such as rising cost of production factors,sluggish domestic real investment and slowing firm's factor structure upgrading.Therefore,in the process of deepping population aging,would firms face some factors that hinder them from using capital to replace labor,thereby affecting the factor structure upgrading? At the same time,improving technological innovation capabilities is an important strategic that support for actively responding to the aging population,but whether aging will affect the firm's R?D investment,and thereby affect their innovation has yet to be clearly answered,so this question is needed to investigate in depth.In addition,in recent years,there has been a serious phenomenon of “de-reality to emptiness” in China's economy,manifested in the “financialization” of non-financial enterprises at the micro level.Then,does the aging population exacerbate this trend? What's more,China is still the world's largest developing country,but she has become the world's second largest outward investor since 2016.So,is China's aging population exacerbating the outflow of capital? These major practical quetions require us to conduct in-depth research to find the driving factors behind them.Based on the above background,this thesis attempts to analysis these questions theoretically,and use the data of China's micro-enterprises to conduct empirical research,which how the rapid development of population aging will affect the investment behavior of micro-economic entities,especially entity enterprises? On one hand,this study will help us to deeply understand the economic effects of population aging from the perspective of micro-enterprises,and provide a possible explanation for some current economic phenomena.On the other hand,this study will also help government formulates and implements policies that actively respond to population aging,and provide empirical evidence for how to “stabilize manufacturing investment” and boost the development of the real economy.The main research contents and findings of this thesis are as follows:First,this thesis explores the impact of population aging on firm's fixed asset investment behavior from the perspective of capital-labor ratio.Economic theory believes that population aging will cause labor costs to rise,and companies will change the factor structure and use capital to replace labor.However,different companies may have different responses to population aging,the reason need in-depth analysis.This paper uses the database of Annual Survey of Industrial Enterprises in China to study the above problems.The empirical results show that,on the whole,the aging of the population has significantly increased the capital-labor ratio of enterprises,but the increase in capital-labor ratio does not necessarily reflect the substitution of capital for labor.In large-scale,lighter financing constraints companies,population aging has prompted them to replace labor with fixed asset investment,but in smaller and more severe financing constraints companies,population aging has not significantly increased their fixed asset investment,only reduced the scale of its labor employment.This result indicates that the firm size and financing constraints are important factors that affect the upgrading of the enterprise's factor structure.In addition,this paper also finds that population aging mainly promotes enterprises to use capital to replace lowskilled labor.The effect of capital substitution labor of population aging is more significant in non-export and higher productivity firms.Secondly,in order to examine the potential impact of population aging on technological innovation,this thesis uses the data of China's listed enterprises from 2010 to2018 to discuss the impact of aging on R?D investment from the perspective of micro-enterprises,and analyzes its mechanisms.The research results show that population aging significantly reduces the R?D investment intensity of enterprises.If the aging increases from 9.54% to 15.16%,it will reduce the R?D intensity of enterprises by about 0.50%,which is 12.5% of the average R?D investment intensity.This shows that the deepening of population aging is likely to be detrimental to the improvement of innovation capabilities.The analysis of the impact mechanism found that population aging has increased the labor cost of enterprises,formed a crowding-out effect on R?D investment,and population aging also reduces the government subsidies received by enterprises,thereby reducing the intensity of R?D investment.Further research found that there is significant heterogeneity in the inhibitory effect of population aging on firm's R?D investment,and its impact is greater in labor intensive,non-state-owned,more competitive industries and smaller enterprises.Thirdly,this thesis observes that China's economy is undergoing a stage of rapid growth in foreign investment and a continuous deepening of the aging population.Whether there is a logic connection between these two phenomena is a question worthy of further discussion.To this end,this thesis uses micro-data from listed companies in China's manufacturing industry to explore the effect of population aging on firm's outward direct investment(OFDI).The study found that population aging has significantly increased the probability of manufacturing firm's foreign direct investment.From an economic point of view,if the ratio of people aged 65 and over rises by 10%,the probability of firm's outward direct investment will increase by about 10%.The mechanism analysis show that population aging has increased the labor cost of manufacturing firms and reduced the output efficiency of unit wages.This will increase the cost of domestic investment relative to foreign investment,reduce firm's profit,and increase the possibility of its outward direct investment.We further find that this effect mainly exists in labor-intensive enterprises.Heterogeneous analysis shows that for labor-intensive,low-tech and non-state-owned enterprises,population aging has a greater impact on their outward direct investment.At the same time,if the company's debt ratio is lower,growth is better and its profitability is stronger,the impact effect is more significant.Fourthly,using the samples of Chinese listed non-financial enterprises from 2007 to 2017,this paper studies the effects of population aging on the economic “shifting from reality to emptiness”,that is,the financialization of enterprises at the micro level.And we also try to analyze the driving factors behind it.The study finds that:(1)The marginal effect of aging population on the proportion of financial asset allocation of enterprises is significantly positive,and can explain about 22% of the increase of financialization level of enterprises in China from 2013 to 2017.(2)There is heterogeneity in the effect of aging population on the economic shifting from reality to emptiness,the effect is greater in enterprises that are non-state-owned,weaker profitability and lower total factor productivity.(3)The difference between the return rate of real sector enterprises and the return rate of financial and real estate industry,as well as the loss of low labor cost advantage of enterprises,are important driving factors for enterprises to allocate more capital to financial assets when facing the negative impact of population aging.Compared with existing literature,the main contributions of this thesis are as follows.First,it enriches the relevant research on the economic effects of population aging.The current literature on population aging mainly focuses on the analysis of its impact on macro aspect,such as economic growth,industrial structure,international trade,and entrepreneurship.Using micro-enterprises data as the starting point,this thesis explores the rapid development of population structure in China on the impact of firm's investment behavior,and there is no systematic research on this issue.This thesis attempts to make a breakthrough on this issue,which can enrich the relevant literature on the economic impact of population aging from a micro perspective.Second,it enriches the literature on the causes of economic “de-reality to emptiness” and outward direct investment behavior.At present,in the literature on the causes of enterprise financialization or economic “de-reality to emptiness”,scholars mainly explain the financial system,profitability pressure,equity structure,and the background of CEOs,this thesis analyzes this question from a new perspective,which is demographic structure transition,it can provide new empirical evidence for the in-depth understanding of the potential risks caused by population aging and resource misallocation.On the menwhile,the literature on firm's OFDI motivation mainly focuses on the discussion of tax avoidance,natural resources and technology spillovers,and the host's market potential.Our research in this thesis use population structure as starting point,so it can provide a new perspective and empirical evidence for in-depth understanding of the impact of population aging on enterprises' investing abroad.Third,this thesis completes the mechanism analysis that population aging affects firm's fixed assets investment and R?D investment.Facing the negative impact of population aging,different companies have different capabilities and willingness to upgrade its factor structure and production technology.This paper analyzes the factors that restrict firm to use capital to replace labor,we find that firm size and financing constraints are key factors.At the same time,this paper mainly focuses on mechanisms such as the increase in labor costs and the reduction in government subsidies to explain the negative impact of population aging on R?D investment,thereby providing useful supplements to existing literature.