Abstract
As China continues to age rapidly, whether the country should adjust the official retirement age, and if so, when and how, are currently major policy concerns. We examine the impact of postponing the retirement age on the human capital of China in the next four decades. Two critical aspects of human capital—health and education—are incorporated to account for the quality of the work force. Our projections reveal the impact of nine scenarios on the Chinese labor force in the next few decades, highlighting the changes in “the high human capital workforce”—those with good health and education. We show substantial impact with added work force ranging from 28 to 92 million per year depending on which scenarios are implemented. Furthermore, the retained workers are increasingly better educated. The gain in female workers is particularly significant, reaping the benefits of the education expansion since the 1990s.
Highlights
Due to the joint effect of fertility decline and prolonged life span, population aging has become a global phenomenon, and the trend is expected to continue in the foreseeable future
The working-age population, i.e., those aged 15 to 64, will increase from 497 million in 2010 to about 709 million in 2030, and remain relatively stable at around 684 million until 2050. Such a trend may seem inconsistent with some other projections such as World Population Prospects by the UNDP and projections of International Institute for Applied Systems Analysis (IIASA), which predict that the working-age population in China may decline soon
This study echoes previous proposals that advocated the adjustment of retirement age for the solvency of the nation’s pension account, but links such initiatives to a different but important issue—the supply of human capital and the implications for future economic development in China
Summary
Due to the joint effect of fertility decline and prolonged life span, population aging has become a global phenomenon, and the trend is expected to continue in the foreseeable future. Major policies developed in response to the aging trend across countries include, though not limited to, the following measures: (1) increasing the fertility rate, (2) adding young immigrants, (3) promoting productivity by enhancing human capital, and (4) extending the retirement age. About 80 countries among the 186 countries in the world have fertility rates that are below the replacement level, namely 2.1 children per woman. Pronatal policies such as financial incentives, maternity or paternity leaves, and childcare provision have achieved limited success. Scholars have predicted that it is almost impossible for fertility in industrialized countries to restore to the replacement level in the near future (Kalwij 2010; United Nations 2012; Davies 2013). For low- and middle-income countries in particular, where 80% of elderly population will live in 2050, this is a gradual longterm solution (World Health Organization 2014)
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