Population ageing and labour supply prospects in China from 2005 to 2050

Abstract

Increasing life expectancy and rapid fertility decline in China since the 1970s have accelerated the pace of population ageing, fueling the prospects of an ageing workforce and a significant slow-down in the growth of the working-age population. The present paper examines the trend of labour supply in China over the next 45 years under alternative fertility scenarios, taking into account the demographic composition effect and potential trends of the age-and sex-specific labour force participation rates. The main finding of this paper is that the labour supply contraction will accelerate from 2020 onwards in response to population ageing and the probable attrition of the labour force participation rate of the young population. Relaxing the current one-child policy may moderate the adverse labour market consequences by increasing the base of the working-age population and decelerate the pace of population ageing.