Inhibiting or promoting: Population aging and economic development in China

Abstract

Population aging has become a social issue of concern to the whole world, and as the world’s most populous country, how to cope with population aging will be a hot issue that all sectors of Chinese society must think about. This paper uses provincial panel data from 30 provinces in China from 2000 to 2021 to study the relationship between population aging and economic development based on the perspective of health expenditure. The DIFF-GMM model, the fixed effect model (FE), and fixed effect instrumental variable model (FE-IV) are used to test this study. The following two conclusions are drawn from the empirical study: (1) population aging has a significant inhibitory effect on economic development, while health expenditures have a significant promotional effect on economic development; and (2) increased health expenditures help to alleviate the negative impact of population aging on economic development. However, the deepening of population aging will likewise inhibit the positive effect of health expenditure on economic growth. Based on the conclusions of the study, it is recommended that the government and society should continue to increase spending in the field of health protection, encourage and guide residents to carry out self-care, and moderately increase personal health expenditure, to promote economic development with healthy bodies and realize the goal of "Healthy China".