The Impact Of China's Population Aging On Macroeconomy

China has entered an aging society since 2000.The number and proportion of Chinese aging population has increased year by year.The study of the impact of population aging on the macro-economy has become an increasingly prominent issue as population aging process accelerated.The focus of this paper is to study the impact of population aging on per capita output,labor participation rate,labor supply rate,output of different industries and inflation.This paper deeply analyzes the quantitative impact of China's aging on the above macroeconomics.It is favorable for country to consider population factor when government formulate macro-policies and conduct economic regulations.Simultaneously,it is beneficial to promote the development of population factors and coordinated economic social development.The paper elaborates the mechanism of the aging population on economic growth,labor participation rate,and labor productivity.It finds that population aging could affect macroeconomic variables through directly or indirectly methods.The paper starts from economic output function to establish the mathematics model between population aging and macroeconomics variables.Then it estimate the quantitative impact of population aging on economic development using the population and economic development data of kind of provinces in China from 2000 to 2015.Lastly,the paper also tests the robustness of the models and results.It finds that the results of this paper are not driven by the function forms of dependent variables and independent variables.It includes that a 10%increase the fraction of population ages 65 and above will decrease the growth rate of GDP per capita by 2.834%in the period 2000 to 2015.However,every 10%increase in aging will fall by 1.6%of per capita GDP growth in 2010-2015when aging is most significant.The effect of population aging on per capita output is approximately equal to the sum of the effect of population aging on labor productivity and labor supply.The impact of population aging on per capita output shows an inhibitory effect with the deepening of the ageing.The higher the ageing level,the greater the inhibitory effect on per capita output growth rate.Outstanding performance is the highest degree of population aging in 2010-2015 and every one percent increase in aging declined by 1.6%per capita output growth.In the study of the impact of aging on the national economy industry,it concludes that there are significantly differences in the effect of population aging on the per capita output of different industries and the effect is affected by the attributes of sectors.When the proportion of the elderly population is low,aging population has a positive impact on the per capita output of the financial industry,wholesale and retail trade,and agriculture,forestry,animal husbandry and fishery.But it would have negative effect on these industries when the proportion is high.These conclusions show that population aging would have an inhibitory effect on the per capita output of some special industries with the gradual increase of the aging level.Taking into account the deepening of the aging,it will inevitably lead to change population structures,social consumption patterns,saving patterns,total supply and total demand.Then population aging has effect on prices and inflation.Recently,the viewpoint that low inflation is related to population factors especially population aging is prevailing but lack of theoretical and empirical analysis.In order to verify this hypothesis,this paper firstly starts from the theoretical point of view to sum up the mechanism of population agling affecting inflation and then constructs a model of the relationship between population aging and inflation based on economic theories.The paper used mixed panel model,generalized regression model,random effect model,fixed effect model and generalized moment estimation to analyze the impact of population dependency ratio,child rearing ratio and population aging on inflation using 31 provinces data from 1993 to 2016.The result notes that population aging does has downward pressure on inflation,which one percent increase in aging dependency ratio leads to about a decrease of about 0.08%to 0.3%in inflation.To verify whether different levels of aging have different effects on inflation,we put the samples of high-aging and low-aging samples in different groups and regress respectively.The results show that the high-aging has a more significant effect on inflation than low-aging.The article has three innovations.Firstly,it used variable decomposition method to separate the aging factors from the population factors and avoid affecting other variables.Secondly,the paper analyzes the quantitative impact of population aging on per capita output,labor productivity and labor participation rate with introducing proxy variables of labor productivity rate and labor participation rate.It also analyzes the quantitative relationships between these effects.Thirdly,it analyzes differences between samples with low aging and samples with high aging affecting inflation.At the same time,this article has disadvantages.It does not study the impact of population aging on the per capita output of labor force of different genders and age groups.It also does not predict the impact of China's population aging on the macroeconomic in the future.