Application of Household and Living Arrangement Projections to Policy Analysis in China
The tremendous reduction in fertility rates combined with baby boomers entering the labor force has resulted in a demographic “dividend” in China since the 1980s, which features a low child dependency ratio, still not-yet high elderly dependency ratio, and a rich labor force supply. Although high social and political costs were paid, the demographic dividend contributed significantly to China’s economic boom in the past 20 years. However, this dividend will disappear in a couple of decades (Cai 2006; Wang and Mason 2006), producing many questions about China’s future. What will the social and economic consequences be if China continues to implement its current strict fertility control policy? Is it necessary to change the current fertility policy? If so, what are the optimistic and feasible options? This chapter addresses these important questions with an application of the ProFamy extended cohort-component method. The unique features of this study include a comparative analysis of possible options for fertility policy transition based on demographic projections of population aging, households and elderly living arrangements, dependency ratios, pension deficits, labor force supply, the marriage squeeze, and economic costs under different fertility policy scenarios.
