Changes in Demographic Factors’ Influence on Regional Productivity Growth: Empirical Evidence from China, 2000–2010

Abstract

Improving total factor productivity is an important way for China’s economy to avoid the middle income trap. Demographic changes are believed to have significant impacts on productivity growth. Using the census and socioeconomic data of 358 prefecture cities in mainland China, this paper analyzes the changes in the global and local spatial dependence of total factor productivity. We then employ spatial regression methods to investigate the role of changes in population factors in productivity growth in 2000 and 2010. We draw three observations from the analysis. First, population density plays an important role in both years. There is an inverted U-shaped relationship between population density and productivity growth. Second, human capital stock has a significant positive impact while human capital inequality becomes insignificant in 2010. This is likely a result of China’s education equality policies. Third, the impact of the aging of workers and their migration status on productivity growth also changed over the decade. Different cohorts of workers and migrants have had different influences on productivity growth because of their different access to higher education. The study provides important insights over how demographic factors impact China’s productivity growth.