Ageing, Household Old-Age Support And Economical Growth

By integrating household old-age support and the one-child policy into an overlapping generation model,we try to answer these questions as followed: (1) Could the ageing Chinese economical growthbe sustainable? (2) Should we persist in the one-child policy under the crisis of ageing? Andhow could it influence the economical growth? (3) What would happen to Chinese futurefertility if the one child policy was abolished? What kind of role does the house old-age supportplay on the determination of the family demand for the baby?As to the first question, we find: Firstly, high saving must go with intensive educationinvestment under the situation of the household old-age support convention and the one childpolicy. Secondly, ageing may depress the saving rate, but on the other hand, it also promotes theeducation investment for his offspring. Therefore, the total effect on economical growth by theageing is ambiguous. Finally, on the basis of current parameters, our stimulations suggest thatthe ageing may damage economical growth.As to the second question, we find: Firstly, the loosening control over the one child policydoes not necessarily result in the decline of economic growth. It depends mainly on the elderdependency ratio, the capital-output elasticity in production, the Child dependency ratio and thenecessary time to take care of children. Secondly, under the one child policy, the householdsaving rate has nothing to do with the Child dependency ratio, but the Child dependency ratiohas negative effect on education investment. Thirdly, our stimulations suggest that looseningcontrol over the one child policy may result in the decline of the economic growth. This declinemay be strengthened by the ageing trend. In brief, we find that loosening control over the onechild policy may do harm to China's economic growth recently. To sustain the economic growth,China should persist in carrying out the one child policy for a long time.As to the third question, we find: Firstly, we find the more expensive cost for parent tobring up his offspring, the less desirable fertility for family; Secondly, the desirable fertility hasnegative effect on household saving rate and education investment. It is obvious that thesuppressed demand for child will rise when the one child policy disappear. Thereafter, the risingdemand for child may do harm not only to capital accumulation, but also to human capitalaccumulation, which may damage the China's economic growth. Therefore, to sustain theeconomic growth, China still should persist in carrying out the one child policy.