Dynamics of Dependency Ratio and Its Impact at Provincial Level in China: A Labor Productivity Perspective

Xiaofei Wang, Beijing Foreign Studies University

China has one of the fastest growing ageing populations in the world, and is expected to become the “super-aged” society around 2035. This has implications for policy areas in terms of providing services and state pensions. Accurate estimation of dependency ratio is a prerequisite for assessing the potential economic consequences and future policy making. Being different from the conventional old age dependency ratio (OADR), our study presented productivity-weighted labor productivity dependency ratio (PWLFDR), a new measure of dependency burden based on the labor productivity of working age population. By use of panel data from 2000 to 2020 in China, PWLFDR clearly calculated the dynamic changes in total output and burden, reflecting the multiple impacts of age structure on social burden at provincial level. Overall, a larger proportion of young (15~29) and middle-aged working age population (30~44) with higher labor productivity can effectively alleviate dependency burden. In contrast, we found a cliff-like decline in labor productivity of elderly working age population (45~64). The larger the share of this group in the labor force, the heavier social burden it caused. Our study provided an alternative method to measure the aging dependency burden and helped to give scientific insights for future evidence-backed, forward-looking policy design to address the negative impacts of aging.

Keywords: Human Capital, Education, and Work, Economic Demography, Population Ageing

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