The Impact Of Aging On Income Inequality Under Opening Economy

After decades of rapid economic development,our country has eliminated "absolute poverty".However,at the same time,there is also the problem of large income disparity in China.The existence of this phenomenon not only affects people’s living standards at present,but also is not conducive to the realization of the goal of common prosperity in the long term.But the study of the income gap problem cannot be isolated and must be combined with specific social situations.On the one hand,China has been faced with an aging population for a few years.Compared with younger societies,an aging society will show different characteristics from the past in terms of consumption,savings,and income disparity.On the other hand,as the international economic environment becomes increasingly complex and the new development pattern of "d ual circulation" is proposed,the focus of China’s economic development will relatively shift from international trade to the domestic economy in the future.However,it cannot be ignored that the shift in economic development pattern will not happen overnight,international trade will remain an important part of China’s economy at present and in the longer term,while international trade has an important impact on domestic factor income distribution,and thus on China’s domestic income gap.Therefore,this study focuses on the impact of population aging on the income gap,especially the wage income gap,in an open economy.Based on the description and analysis of the relevant facts of China,this study incorporates the three elements of aging,international trade and the wage income gap into a unified framework,combines an Overlapping Generation model and a specific-factor model,and models the effects of aging on the income gap under the conditions of a closed economy and an open economy respectively,analyses the effects of aging on the income gap and explains its internal mechanism.The following conclusions are drawn:In a closed economy,ceteris paribus,as aging deepens,first,the share of higher-skilled labor with higher education increases,the share of lower-skilled labor with lower education decreases,and countries with higher aging will become relatively well endowed with high-skilled labor resources;secondly,all individuals consume less,save more,and are less likely to have children,but the magnitude of these changes varies between different types of labor;and thirdly,the wage income gap will widen.In an open economy,as trade occurs between economies with different levels of aging,ceteris paribus,two different effects arise depending on the actual situation,and when each of the two effects dominates,the pattern of trade and the wage income gap in the more aging economy changes in exactly the opposite direction.These two effects which affects commodity prices are the supply-reducing effect,caused by a relative decline in the supply of low-skilled labor-intensive products due to deeper aging,and the demand-reducing effect,caused by a relative decline in the demand for low-skilled labor-intensive products due to deeper aging.When the supplyreducing effect of commodity prices dominates,the more aging economy will export goods produced intensively with low-skilled labor and import goods produced intensively with high-skilled labor,while its already aging-induced income gap widens further;when the demand-reducing effect of commodity prices dominates,the more aging economy will import goods produced intensively with low-skilled labor.will import goods produced intensively with low-skilled labor and export goods produced intensively with high-skilled labor,while the original aging income gap within the country will be reduced,but it is not clear whether the income gap will be lower than it was before aging took place.