China's low fertility may not hinder future prosperity.

Guillaume Marois, ADRI, Shanghai University
Stuart Gietel-Basten, The Hong Kong University of Science and Technology
Wolfgang Lutz, Wittgenstein Centre

China’s low fertility is often presented as a major factor which will hinder its prosperity in the medium- to long-term. This is because of the traditional association with population decline and, more particularly, population ageing with negative economic outcomes. In this vein, there is much discussion about the development of policies to increase fertility, even after decades of policies restricting the number of children most citizens are entitled to bear. In this paper, however, we argue that the traditional means of conceptualizing low fertility and the relationship to economic futures is over-simplified and may well be highly misleading. While fertility has indeed fallen to low levels, human capital accumulation has been very striking. Factoring in the relationship between demographic change and this human capital development and productivity (as well as more accurate measures of labour force participation) is possible through the generation of a new measure – namely the “Productivity Weighted Labor Force Dependency Ratio”. When using this ratio, compared to more traditional measures, a very different, and much more optimistic, picture of the economic (and social) future of China can be envisaged.

Keywords: Human capital and labour markets, Fertility and childbirth, Population size and growth/decline, Population ageing

See paper.

  Presented in Session 9. Education, Human Capital and Demography