Population Aging and Inequality: Evidence from the People’s Republic of China
As the population grows older in the People’s Republic of China, income and consumption inequality increase.
Population aging has significant economic and social costs. In this paper, we study its impacts on inequality, both theoretically and empirically. First, we build a two-period overlapping-generation model with an uncertain lifetime and find that population aging has the overall effect of increasing income and consumption inequality within society. For the empirical analysis, we use household data from the China Health and Nutrition Survey to assess the age effect on income and consumption inequality in the People’s Republic of China and confirm the results predicted by the theoretical model.
WORKING PAPER NO: 794