The Relation between Age Structure of Population and Resident Consumption Based on Endogenous Growth Theory

Abstract

Within the framework of endogenous growth theory, the dynamic relation between age structure of population and resident consumption was studied, and explicit relation between resident consumption and dependency coefficient was obtained through Hamiltonian function method. Then, an empirical study was carried out based on panel data of 31 provinces of China in 2000-2013. The study gave following results: there is negative correlation between child dependency coefficient and resident consumption and there is positive correlation between elderly dependency coefficient and resident consumption; urbanization level weakens the negative effect of child dependency coefficient on resident consumption but it increases the positive effect of elderly dependency coefficient on resident consumption; social expenditure weakens the negative effect of child dependency coefficient on resident consumption, but it intensifies positive effect of elderly dependency coefficient on resident consumption. These results indicate that current population structure of China is favorable for growth of resident consumption demand, but in such aging population structure, economic development may lose demographic dividends.