Economic Implications of China's Demographics in the 21st Century

Author/Editor:

Kevin C Cheng

Publication Date:

February 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This study assesses the economic implications of China's changing population in the 21st century using a numerical general equilibrium model. The simulations show that lower fertility rates yield lower saving rates. Since lower fertility rates reduce the future supply of labor, capital will become less productive. Consequently, if international capital mobility is high in China, a low fertility rate implies more future capital outflows. But if capital is less mobile, low fertility today lowers the domestic return to capital and raises the domestic return to labor. In addition, the paper finds no significant link between demographic structures and per capita income growth.

Series:

Working Paper No. 2003/029

Subject:

English

Publication Date:

February 1, 2003

ISBN/ISSN:

9781451844825/1018-5941

Stock No:

WPIEA0292003

Pages:

31

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