Abstract
China's low fertility is often presented as a major factor which will hinder its prosperity in the medium to long term. This is based on the assumed negative consequences of an increasing old-age dependency ratio: a simplistic measure of relative changing age structures. Based on this view, policies to increase fertility are being proposed after decades of birth restriction policies. Here, we argue that a purely age structure-based reasoning which disregards labor force participation and education attainment may be highly misleading. While fertility has indeed fallen to low levels, human capital accumulation has been very strong-especially among younger cohorts. Factoring in the effects of labor force participation and educational attainment on productivity, a measure called "productivity-weighted labor force dependency ratio" can more accurately capture the economic implications of demographic change. When using this ratio, a much more optimistic picture of the economic (and social) future of China can be envisaged.
Highlights
China’s low fertility is often presented as a major factor which will hinder its prosperity in the medium to long term
Our simulations show that indicators of dependency which take into account other population characteristics present a very different, more optimistic future for China—even under conditions of very low fertility
This is not to say that the ongoing demographic change within China will be without difficulties
Summary
China’s low fertility is often presented as a major factor which will hinder its prosperity in the medium to long term This is based on the assumed negative consequences of an increasing old-age dependency ratio: a simplistic measure of relative changing age structures. The recent relaxations of the birth control policies have had relatively little impact, and fertility preference surveys reveal a sub–two-child norm among large segments of the population [3, 9,10,11], including the “floating population” of internal migrants [12] In this context, there is little expectation that the recent relaxations to permit more than two children per family may make any meaningful change to the overall TFR
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