Disappearing demographic dividend does not mean that the population has lost the ability to promote economic development

Since the launch of reform and opening-up, China's economy has grown rapidly, with the demographic dividend considered to be one of the key contributors. The generation, development and disappearance of such a dividend has been fully discussed for a long time, but after analyzing the data from the Seventh National Census, the National Bureau of Statistics has concluded that the demographic dividend "still exists".

To ensure the demographic dividend lasts as long as possible, there should be sufficient working-age people and a low unemployment rate and full employment of the population. Thanks to the full employment policy, the registered unemployment rate has always been low. Thus, the main factor determining the duration of the demographic dividend is the size of working-age population.

Based on the analysis of the population forecast, the dividend can last for about another 30 years, based on the premise that China's future fertility rate is 1.4.

At present, China still boasts a relatively abundant demographic dividend but it faces some challenges in giving full play to the "population opportunity" and maximizing the harvest of the dividend.

China's demographic dividend after the launch of reform and opening-up was partly due to the policies that were conducive to economic grow that time, and also to the age structure that was the result of the changes in the fertility rate after the founding of the People's Republic of China.

In the 1950s and 1960s, the fertility rate was relatively high, and the annual average number of newborns was more than 20 million. These people entered the labor market after the reform and opening-up policy was launched, providing sufficient human resources for economic growth. But the fertility rate dropped significantly in the 1980s because of the family-planning policy at the time. Generally, one-child families were common in cities, and the burden of raising children was not so heavy. Such a special age structure helped China enjoy the demographic dividend in the middle and late 1980s. However, with the gradual aging of the population born in the 1950s to 1960s and their withdrawal from the labor market, the size of the population born in the 1980s to 1990s who newly entered the labor market was insufficient to make up for this "gap", and the demographic dividend is doomed to disappear.

Even if the fertility rate improves, it is still necessary to make up for the "gap" of the labor force born in the 1980s and 1990s after the current population enters the labor market. From the perspective of rolling out policies to regulate employment, on the one hand, the current registered unemployment rate has been low despite a relatively severe employment situation due to the global economic downturn, so there is not much space to further improve employment through policy incentives. On the other hand, delayed retirement can allow China to have prolonged demographic dividend but it is challenged by both physiological and occupational factors, as it is difficult to boost employment of the elderly population and match the employment structure of the elderly with the development direction of the future industrial structure. It is difficult to convert the newly increased working-age elderly people into the employed, so the feasibility of creating demographic dividend from the elderly is low.

Under the circumstance that the demographic dividend is bound to disappear, it is necessary to make rational use of the existing population advantages with the coexistence of economic growth and population aging to promote economic growth.

First, maintaining a reasonable fertility rate is still the unshakable principle of future fertility policy. Although raising the rate cannot change the fact that the demographic dividend will disappear, at least it can promote the population's long-term balanced growth. A large number of studies on China's fertility rate have consistently shown that the endogenous low fertility is the key factor for its slow growth. Relaxing the birth restriction is only a necessary condition, not a sufficient condition. From the perspective of birth subsidies and services, the cost and pressure of birth should be reduced for an appropriate fertility rate.

Second, the total working-age population still accounts for half of China's population, so China can adopt a reasonable employment policy to give full play to the advantages of the age structure of the working age population within the limited scope of policy. At present, employees of different genders and professions have differentiated retirement policies to meet the retirement rights of different groups, but this also causes confusion in the retirement system, and there are non-conforming phenomena such as early retirement.

Therefore, ensuring the employment rate of the employable groups can help to extend the demographic dividend to a certain extent.

Third, efforts should be made to create new driving forces for economic growth. The disappearance of the demographic dividend does not mean that the population has lost its function in promoting economic development, and other natures of the population can still continue to boost economy. As China's economy transforms from high-speed to medium-speed growth, and enters the new development paradigm, the contribution of the population to economic growth has long been reflected not only by the advantage of the age structure. With the improvement of the education structure, people's well-rounded development and innovation ability, population still plays a role in developing economy. The population factors besides the age structure should be explored to build new driver of economic growth and further bolster economic development.

Wang Guangzhou is a researcher at the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences. Liu Xuyang is a post-doctoral candidate at the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences. The authors contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.