Retirement Age,Structural Change and Population Growth
WANG Yubing, GUO Kaiming
Center for Studies of Hong Kong, Macau and Pearl River Delta, Sun Yat-sen University; Institute of Guangdong,Hong Kong and Macao Development Studies, Sun Yat-sen University; Lingnan College, Sun Yat-sen University
Summary:
In the new development stage, China will undergo a prolonged process of rapid demographic transition and deepening population aging. Whether viewed from the perspective of increasing life expectancy or phased reform of the statutory retirement age policy, the extension of working hours and raising retirement age represent fundamental long-term challenges that China will face in the long term amidst its aging population. Accurately understanding the impact of this trend on structural change and population growth holds significant importance for implementing proactive national strategies addressing population aging and promoting high-quality population development. Based on the facts in China that families are deeply influenced by family grandparenting culture and there is gender difference in the retirement age, we study in this paper the impact of raising retirement age of workers on structural change and the trend of population growth. We first summarize the distinct economic characteristics of gender difference in market production and household fertility. Then, we incorporate these characteristics into an overlapping generations dynamic general equilibrium model featuring gender difference, grandparenting, endogenous population growth and structural change. We systematically develop a theoretical framework on how men's and women's raised retirement age affect structural change and population growth. Furthermore, we examine the robustness of these mechanisms in contexts featuring social pension funds, intergenerational differences in labor productivity and rising life expectancy. We propose that: first, raising retirement age directly affects population growth through income growth effect and grandparenting effect. If women hold a comparative advantage in grandparenting, then due to the lower wage rate relative to men, raising retirement age for female workers exerts stronger grandparenting effect but weaker income growth effect, thereby more likely to reduce the population growth rate. Conversely, the opposite holds for raising retirement age for male workers. Concurrently, raising retirement age alters female labor supply relative to males. Given women's comparative advantage in services and men's in manufacturing, increased female relative labor supply raises manufacturing share and widens the wage gender gap, and vice versa. As women possess comparative advantages in childbearing and childrearing relative to men, wage gender gap adjustments induce co-directional changes in household fertility rate and population growth rate. Second, when men's comparative advantage in manufacturing or women's in services strengthens, raising retirement age exerts amplified effects on structural change while leaving impacts on population growth largely invariant. Enhanced female comparative advantage in grandparenting magnifies the impact of raising retirement age for female workers on population growth, and reduces the negative impact of raising retirement age for male workers on population growth, potentially turning them positive. Strengthened female comparative advantage in childbearing and childrearing weakens the impact of raising retirement age for female workers on structural change. Third, raising retirement age maintains robust impacts in contexts featuring social pension funds, intergenerational differences in labor productivity and rising life expectancy. When productivity ratios between elderly and young cohorts widen, raising retirement age amplifies effects on structural change. Under rising life expectancy, raising retirement age for female workers amplifies effects on population growth while modestly attenuating effects on structural change. We integrate a distinct perspective on gender difference in market production and household fertility with Chinese grandparenting culture, developing theoretical research regarding the systemic interdependencies among retirement age, structural change and population growth. We derive the following policy implications from China's institutional background, featuring deep-rooted family grandparenting culture and gender difference in both market production and household fertility. As raising retirement age, policymakers must proactively refine measures to coordinate population growth with structural change. First, comprehensively protect female workers' rights and interests while substantially reducing household costs for childbirth and childrearing. Second, fully leverage demographic transition and structural change trends to promote coordinated advancement of workforce optimization and industrial upgrading.
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