Further Study On Chinese Demographic Dividend

During the Chinese demographic transition from high birthrate, low mortality rate and high natural growth rate to low birthrate, low mortality rate and low natural growth rate, a demographic dividend stage arises characterized by high proportion of working-age population. Due to huge difference in birth control policy, traditional concepts, education and economic development, the rural and urban may step into the demographic dividend era at different pace with different effect on their economic growth.We divide statistic data into county-level and prefecture-level cities and analyze demographic dividend in rural and urban areas separately. Empirical test arrives at the following conclusions. First, no matter in countryside or city, young dependency rate and total dependency rate both have a negative effect on economic growth. Second, old dependency rate is significantly and positively correlated with rural economic growth, but weakly and negatively correlated with urban economic growth. It turns out that old dependency rate doesn’t have significant negative effect on economic growth of China as predicted by the life-cycle theory. The reason could be the increase of old dependency rate can produce benefits as well as costs. The net effect depends on the comparison of costs and benefits. Benefits include the following aspects:First, the old keeps high labor participation especially in rural area. Second, a lot of women labor forces are released to the market with the help of the old in the form of looking after grandchildren and taking up burden of housework. Third, Family-supporting institution promotes savings from two channels:for one thing, the working generation has to save more to support their parents, for the other thing, the old inclines to increase precautionary savings for their post-work life in anticipation of approaching aging society and the extension of life expectancy. Fourth, the increasing aging population creates a new economic growth source called’Silver Industry’, including industries providing service and products for old population. However, there is also a rise in costs with the intensification of aging, such as the medical expenditure, pension outlays and social security payments. We analyze the different effects caused by aging from the perspective of urban-rural dualistic economic structure in this article. This will lay foundation for further understanding the relation between demographic dividend and economic growth and predicting potential for future economic growth in China.