New research on China suggests that declining birth rates and an aging population might not hinder future prosperity when associated with better education of the young.

While recent drops in China’s birth rate have led to concerns about population aging and economic decline, possible negative consequences of an aging population in China could be offset by the increasing education levels in the population, according to new research published in the journal Proceedings of the National Academies of Sciences (PNAS).

China has the largest population in the world, with rapid economic growth that could soon rival the USA as the world’s largest economy. According to official sources, China has seen declining birth rates in recent years  ̶  the fertility rate in 2020 hit a record low of 1.35  ̶  meaning that for every woman, only an average of 1.35 children are born. As in other countries, these declining birth rates have raised speculations that population decline and aging could threaten the country’s growth and future prosperity.

In response, the government of China has introduced a three-child policy, and some local governments have begun introducing incentives for larger families.

However, many concerns about aging populations, in China as well as elsewhere in the world, are based on simplistic assumptions about the effects of age structures that are outdated, say the researchers.

“Rather than focusing only on the age structure of the population, we took into account the massive expansion of education in China in the assessment of the challenges brought by low fertility and population aging,” explains study lead author Guillaume Marois, a distinguished professor at the Asian Demographic Research Institute of Shanghai University and a researcher in the Population and Just Societies Program at the International Institute for Applied Systems Analysis (IIASA).

To calculate the consequences of population aging on economic growth, demographers have traditionally used a metric called the age dependency ratio, which relates the number of children and elderly to the size of the working age group 15-64. Children and people past retirement age are considered to be dependent on the working-age population. If the labor force participation rates stay the same, then population aging would lead to a greater proportion of older people who are dependent on the younger working population.      

However, this ratio does not consider the fact that labor force participation is changing and not every working person is equally productive.

Marois and colleagues analyzed the potential demographic and economic developments using methods, developed by researchers at IIASA that take into account not just the age and sex of the population, but also important factors including labor force participation and education, which affect productivity.

By taking a multidimensional view of population structure, the researchers found that the picture of future economic growth in China is more positive than recent news reports suggest. In particular, this is because with increasing levels of education for women, they are more likely to join the labor force.

Study coauthor Stuart Gietel-Basten, director of the Center for Aging Science based at the Hong Kong University of Science and Technology, says, “We found out that as new cohorts of workers will be much more educated than those who retired, they are likely to be much more productive. This replacement of older lower-educated cohorts by younger ones who are much more educated has the potential to offset many of the negative consequences of population aging.”

The study shows that while the total number of workers will start declining before 2025 those with a high level of education will keep growing, since the younger people entering the labor market are much more educated than older ones retiring.

The researchers say that the implications of their study could provide some reassurance for policymakers, but only if the trend towards increasing education levels continues.

Wolfgang Lutz, founding director of the Wittgenstein Centre and IIASA demography expert, says, “Population aging is unavoidable, but negative economic consequences of population aging are not inevitable. More than increasing fertility, ensuring that current and future generations receive a good quality education is the key to deal with challenges of population aging.”

Reference

Marois G, Gietel-Basten S, Lutz W. (2021). China's low fertility may not hinder future prosperity. Proceedings of the National Academies of Sciences (PNAS) DOI:10.1073/pnas.2108900118

 

News

Wind turbines in Hebei Province, China.

14 February 2022

Pursuing carbon neutrality and water security in China

China has promised to become carbon neutral before 2060 and has coupled this ambitious target with stringent limitations on industrial water use by 2030. An international team of IIASA researchers and Chinese colleagues explored the effects of simultaneously pursuing these goals.
Rice terraces reflecting blue and red colors

18 October 2021

Exploring the global environmental impacts of China's growing demand for food

Ensuring China’s future food security will have huge environmental impacts, both domestically and globally. A study by IIASA researchers and Chinese colleagues shows that carefully designed policies across the whole of China’s food system, including international trade, are crucial to ensuring that future demand can be satisfied without destroying the environment.
Tractor spreading fertilizer on field before planting

13 September 2021

Balancing food security and nitrogen use

Environmental targets to limit excess nitrogen require the large-scale deployment of dedicated nitrogen mitigation strategies to avoid a strong increase in the risk of food insecurity. Without these measures, the amount of dietary energy available to people would be greatly reduced, which would in turn lead to high food prices and an increase in the number of undernourished people.