Population Dynamics, Human Capital, and Economic Growth: The Consequence of One-Child Policy in China

The first chapter demonstrates that the fertility restrictions due to one-child policy effectively promote human capital accumulation and the faster human capital creation help accelerate economic growth in China. Since 1980 when the policy enacted, it suppresses population growth and induces a large shift of population age structure during demographic transition from high to low fertility society. To quantitatively identify these effects, I develop a dynamic general equilibrium overlapping generation model with endogenous fertility, human capital accumulation and intergenerational transfers. I calibrated and solved the model for Chinese economy since 1950 with dynamic programming algorithm. Simulations imply that exogenous fertility restrictions imposed by one-child policy largely increase expected years of schooling during policy periods, and produce generations of \u27high-quality\u27\u27 population. After decades the policy enacted, each high-quality worker produces more GDP per year, compared with one living in non-policy regime. Simulations also suggest that for the economy in policy regime, it achieves a sustainable lower population growth rates. For a considerable length of time, the share of old-age population is much larger and the share of young-age population is much small. As result, society will face a severe labour force shortage in near feature. The second chapter demonstrates that the school efficiency deducted from the theory is highly consistent with data. I construct model school efficiency and data school efficiency, and detect their relationship with least squares and fixed effects regressions. Statistical results provide a strong evidence that the implication from the theory is highly consistent with reality