Effects Of Population Aging On Exports:Theoretical And Empirical Analysis

After the Second World War, with the development of social economy, the borning willingness of people gradually decline, while the improvment of medical and health services extend the average life expectancy, thus the world generally faces demographic aging trend. Population aging has not only changed the population distribution, but also changed the social consumption preferences and savings habits. This will change a country’s relative endowment of capital and labor, which will affect the trade balance, trade structure and export comparative advantage. In this context, exploring the impact of population aging on export trade patterns and comparative advantage, as well as the enlightenment to China whose demographic structure is under changing will become the focus of this study.As a country with the largest population in the world, China relys on abundant labor resources and low population dependency ratio to develop the labor-intensive industries’ exports under the guidance of traditional comparative advantage trade theory and factor endowment trade theory after the reform and opening-up, this obtains immensely success. However, the demographic structure is not stable, it begins to change with the implementation effect of the one-child policy and the extending of average life expectancy, which will have an important impact on China’s export trade. Forewarned is forearmed. To recognize the impact of population aging on the export trade is important for a country owns large population to adjust industrial structure, especially for China who dependents on abundant labor endowment to implement export-oriented economic development strategy.China’s export trade structure upgrading is imminent with aggravating of the aging population extent in future.The former literatures mainly focus on the impact of population aging on export trade from the perspective of trade balance or current account. Considering that population aging will lead to a reduction in labor supply, increased consumption, declined savings and investment, so as to output and export expansion, this will lead to trade deficits. But this is only the analysis of trade size or trade balance on total level. This paper argues that, although, population aging is bad to the trade balance on the perspective of trade size, but on the perspective of trade structure, population aging will lead to upgrading on a country’s export trade structure and comparative advantage, the export trade structure and comparative advantage will transfer to capital intensive goods. However, there is little literature focus on the impact on export trade structure and comparative advantage made by population aging.For this purpose, this paper attempts to construct overlapping generation model including two countries, two production factors, two categories of goods and two life stages, to examine the impact of population aging on a country’s export trade structure and comparative advantages theoretically. At the same time, we introduce two variables, the birth rate variable and the average life expectancy variable, into the model to explore different impact of the population aging causes on export comparative advantage, to make a comprehensive understanding of microscopic mechanism of the export trade structure and comparative advantage’s dynamic evolution under the circumstance of demographic changing. In addition, this paper further discusses how the financing constraints and human capital variables affect the realization of the mechanism in the theoretical model. Finally, in the empirical part, this paper verifies above propositions by using multinational and Chinese data, to discuss whether population aging is in favor of the export trade structure optimization or comparative advantage enhancement. We put forward the corresponding policy recommendations.The full text contains seven chapters. The first chapter is the introduction, introducing the research background, significance, research ideas and structural arrangements, innovation and insufficient. The second Chapter is the review of the existing population aging literatures and research status. The third Chapter describes the present situation, the future development trends and development characteristics of worldwide and Chinese population aging, introducing the causes and characteristics of the population aging detailedly to lay the reality foundation for the following theoretical analysis.In the forth Chapter we construct a theoretical model to analyze the microscopic impact mechanism of population aging on comparative advantage and export trade structure. The fifth Chapter is the empirical analysis to test the impact of population aging on a country’s trade balance and export trade structure by using cross-country data.The sixth Chapter is the empirical studies from the perspective of China, to test the impact of population aging on the dynamic evolution of China’s export trade structure and comparative advantage.The seventh Chapter summarizes the full text and presents policy recommendations accordingly.Through theoretical and empirical analysis, this paper obtains the following conclusions:Firstly, China and many other countries in the world will generally be facing a population aging exacerbated situation in the future, especially China’s population aging will increase at a faster pace in transition period. Secondly, those countries with higher population aging degree and declining birthrate have a export comparative advantage on capital-intensive goods, export trade structure is dominated by capital-intensive goods. Thirdly, on a dynamic perspective, increasing population aging will raise the relative price of labor-intensive goods, reduce the relative price of capital-intensive goods in the country, this will prompt the country’s export comparative advantage shift to capital-intensive goods. Fourthly, cross-country empirical analysis finds that population aging is unfavorable to the trade balance, but favorable to the trade structure. Fifthly, Chinese empirical analysis finds population aging is in favor of upgrading of the export trade structure, and good to the transfer of export comparative advantage to capital-intensive goods.