Population Aging, Economic Growth, and Global Justice: Examining China’s Rising Old-Age Dependency Ratio

As countries worldwide undergo rapid modernization, the universal problem of a rising life expectancy and decreasing fertility rate arises inevitably, leading to uncertainty about its consequences on productivity. This study hypothesized that a rapidly increasing old-age dependency ratio (OADR) can contribute to stagnant long-term economic growth. It also provides evidence on the many consequential effects associated with a high OADR and reveals how they can contribute to development differently. Using data from thirty-one districts in China, this study derives relationships between real GRP per capita growth, healthcare spending per capita, and birth rates in correspondence to the old-age dependency ratio. A log-log transformed two-way fixed effects regression model was used to evaluate changes in real GRP per capita in relation to OADR. The findings do not provide sufficient evidence to reject the null hypothesis that OADR and real GRP per capita have a positive or no real relationship. However, it reveals that decreasing birth rates are more strongly correlated with OADR than increasing consumption expenditure on healthcare per capita, suggesting that birth rates may have a more profound impact on economic development as a related secondary effect. Since a high OADR increases the financial and emotional strain of the working-age population, these findings function to provide both insight on the factors that impact economic development and explore potential solutions to support citizens in China during a demographically aging era. Subsequent studies involving this topic are able to include a larger sample size for increased statistical power and to establish causation between OADR and its associated effects.