Qiyao Sun

“Spillover Effect” or “Crowding-Out Effect?” The Effect of Population Aging on Human Capital Accumulation in China

Started Sept. 25, 2023

Abstract or project description

This paper examines the effects of population aging on human capital development in China through a comprehensive analysis encompassing descriptive statistics, benchmark regression, variance decomposition, net effect measurement, heterogeneity testing, additional study, and robustness testing. Descriptive statistics highlight the unequal impact of provincial policies on aging and human capital accumulation due to disparities in the values of critical variables across provinces. Regression benchmarks indicate that aging affects individuals through various avenues, yielding both positive and negative effects. This variance decomposition, in particular, demonstrates that random events are responsible for a significant portion of the variance in human capital. The outcome assessment reveals that some positive effects outweigh the negative impact of population aging on human capital development. Heterogeneity testing confirms that different areas of the country display different aging effects, with the eastern and central regions more heavily affected than states in the western area. The following analysis seeks to elucidate the factors contributing to the variation in high-quality human capital accumulation. Robustness tests confirm the negative relationship between population aging and human capital accumulation, overcoming potential issues with data reliability and simplified regional categorization. Overall, the research highlights the multifaceted impact of the aging population on the growth of human capital in China, offering insights for policymaking and directions for future research.