Inhibiting or promoting: Population aging and economic development in China

Area of Science:

• Socioeconomics
• Public Health Policy
• Demographics

Background:

• Global population aging presents a significant challenge, particularly for populous nations like China.
• Understanding the interplay between demographic shifts and economic trajectories is crucial for policy formulation.
• Health expenditure's role in mediating the economic effects of population aging requires empirical investigation.

Purpose of the Study:

• To examine the relationship between population aging and economic development in China.
• To assess the impact of health expenditures on economic growth within an aging population context.
• To provide evidence-based recommendations for policy interventions.

Main Methods:

• Utilized provincial panel data from 30 Chinese provinces spanning 2000-2021.
• Employed Difference-in-Differences Generalized Method of Moments (DIFF-GMM).
• Applied Fixed Effects (FE) and Fixed Effects Instrumental Variable (FE-IV) models for robustness.

Main Results:

• Population aging demonstrates a significant inhibitory effect on economic development.
• Health expenditures exhibit a significant positive impact on economic development.
• Increased health expenditures partially alleviate the negative economic consequences of aging, but aging also diminishes this positive effect.

Conclusions:

• Population aging poses a substantial risk to economic growth in China.
• Strategic investment in health expenditure is vital for economic resilience amidst demographic changes.
• Policy recommendations emphasize sustained public and private health spending to foster economic development and achieve 'Healthy China' goals.