The impact of aging on labor productivity: integrating the human capital perspective

Purpose Population aging is a global challenge, particularly for developing countries that heavily rely on low-cost labor and the manufacturing industry. However, current research oversimplifies the assessment of aging's effect on labor productivity by only considering gross domestic product per worker, while ignoring important factors related to human capital. Design/methodology/approach This article uses secondary panel data from China's Statistical Yearbook and Labor Statistical Yearbook. The DEA approach is employed to calculate labor productivity in China's 31 provinces between 2000 and 2020. The effect of population aging on labor productivity with human capital is evaluated with a Tobit regression, and robustness checks validate the findings. Findings Population aging negatively affects traditional labor productivity but has a positive effect on labor productivity with human capital. This positive effect is most pronounced in western China, followed by central China, and weakest in the eastern region. Originality/value Policymakers should focus on China's western and central regions to fully leverage the human capital of the elderly population. Additionally, although urbanization and social security expansion may reduce labor productivity with human capital, the government should still prioritize the well-being of the elderly by strengthening social security and employment support. Providing a stable and secure living environment for the aging population remains essential for ensuring their overall quality of life.