Demographic Dividend And Regional Economic Growth

China has experienced rapid economic growth at the rate of9.9%over the pastthree decades, which was described as “the Miracle of China”. China’s fast growth ofeconomy can be attributed to many a factor among which demographic dividend is forsure an important one. David E. Bloom et al defined demographic dividend as theopportunity for economic growth provided to developing countries by demographictransition. Since the reform and opening-up, China has been undergoing the transitionfrom high fertility, low mortality and high population growth to low fertility, lowmortality and low population growth. As a result, the dependency rate has beencontinuously falling and the potential labor forces have been on the rise. However, ifwithout enough employment opportunities, these potential labor forces would have beena big burden for the society instead of the source of demographic dividend. In the1980s,China began to reform its policy regarding urban-rural migration so as to allow peopleliving in the countryside to migrate to cities for employment. Ever since that time, agigantic amount of people have moved into cities or towns to look for jobs offeringhigher income. Lifting restrictions on the migration of people from the countryside hasmade it possible for a multitude of surplus labor in rural areas to be employed in cities.The unlimited supply of surplus labor from the countryside has enabled the companiesin cities to manufacture products at very low costs, which dramatically enhanced theircompetitiveness. Meanwhile, the reduction of surplus labor in rural areas has alsocontributed to the improvement of agricultural productivity.Demographic dividend facilitates economic growth through labor supply, savings,human capital, and reallocation of labor forces. The demographic transition of ZhejiangProvince was almost simultaneous with that of China. By comparison, the fertility levelof Zhejiang was lower than national average while its mortality level was basicallyequal to national average. Zhejiang started to benefit from demographic dividend inearly1980s, which was approximately ten years ahead of the nation on average. Theeconometric analysis conducted in this paper shows that demographic dividend hasindeed contributed to the economic growth of Zhejiang between1980s and2000s to acertain extent. In addition, the inflow of population from other provinces has helpedoptimize Zhejiang’s demographic structure which has become even younger and more productive. The analysis of the influence of net inflow population on Zhejiang’seconomic growth also proves that migrant workers from other provinces have played apositive role and deserve the same social welfare as local residents.Demographic dividend doesn’t last forever and is only temporary. As newlyincreased labor forces have been falling year-on-year and the process of rural surpluslabor migrating to cities is approaching the Lewis Turning Point, demographic dividendin China has taken on a diminishing trend and is going to disappear soon as someexperts predicted. As for Zhejiang, demographic dividend may disappear shortly after2010marked by the turning point of dependency rate curve or in around2034markedby dependency rate surpassing the critical point50%. In order to meet the challengebrought about by diminishing demographic dividend, a few policy suggestions are putforward, i.e. make further use of the first demographic dividend, develop the seconddemographic dividend, increase funding in education and vocational technical training,enhance the contribution of technological progress to economic growth, and promoteindustrial upgrading and economic restructuring.