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ECON 336 Naughton - Chapter 7.docx

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Economics (Arts)
ECON 336
Christopher Green

Chapter 7: Population Growth and the One-Child Policy  China’s population has been largely defined by the Great Leap Forward, and the One Child Policy The Demographic Transition  1400-1800s: Population growth rate is 0.4% (high birth rate and high infant mortality rate)  1850- 1950: Growth rate is 0.3% (disease, crop failure, civil war)  1953: First modern census counted 594 people  1949: rapid improvements in nutrition, sanitation, water supplies, maternal care and health (provided by basic level health care workers and preventative medicine) o Death rates and infant mortality rates decline o At first, birth rates remain high -> accelerated population growth (peaks at 3%) o Birth rate then declines due to increase in infant survival and better birth control, as well as social changes that increase desirability of smaller families (moving out of agriculture, increased labor participation of women, increase target levels of education, increase level of education among women, etc.) o Trend disrupted by the famine created by the Great Leap Forward, which resulted in 30 million deaths and “replacement births” o Trend resumes in the 1970s (lowered birth and death rates) o Life expectancy increases (from 41 years in 1950a to 71 in 2000) o Fertility drops dramatically (especially in urban areas-> rural-urban divide) The Role of Government Policy  Family planning started in 1953: in response to population growth (education on contraceptives)  Stopped by Mao  Program resumed after the GLP  1971: first family planning initiative promoting later marriages, longer spacing between children, and fewer children o Policy lasted until 1978 and cut fertility in half  Fear of population crisis with baby boomers (born after the GLF) reaching marrying age -> growth would obstruct economic development  1980: One-Child policy and target population of 1.2 billion in year 2000 o Promoted only one child/family and punished those who had two or more o Extremely strict implementation in the first five years (mandatory IUDS, forced sterilization, and forced abortion) o International and domestic criticism relaxed the policy o Allowed second child if first was a girl, etc… o Fluctuations in strictness o Not applicable to non-Han population o Monitored by local officials (subjects all households to monitoring) o Pressure and regulation varied between urban and rural areas, and regionally as well o Often, severe financial penalties on third or fourth child (versus privileges for those with only one) Consequences of the One-Child Policy  Despite strictness: not fully effective (China surpassed population target in 2000 at 1.26 billion)  Some argue a less aggressive policy (incentive-based) would have been more successful)  Administered differently across regions (in poor provinces, fertility is highest, whereas in large cities and coastal, fertility rates have dropped below target  where policies are most strict)  Most important side effect: unbalanced sex ratio due to preference for boys (as girls marry out and are an economic burden) o In 2000: 100 girls for 120.8 boys due to female infanticide, not being registered at birth, and unreported to census takers o Mostly the result of sex-selective abortion o Will likely cause a “bachelor problem” in the future when males will be unable to find brides Changing Age Structure of the Population  Current age structure: 70% of population between ages 15 and 64 (2000) -> low dependency rates o Working age population is growing faster than the population as a whole o Higher material living standards o Rapid growth in per capital GDP o More savings and investments o Young population is also more adaptable and able to accept rapid social changes  Now, growth of labour force to slow (last of baby boomer echo, and fewer young people as a result of birth control policies) o Growth of the working age population expected to reach 0 by 2015, and the only source of growth in the modern labour force will be rural to urban migration o This will reduce pressure on urban employment o Will likely translate to slowly GDP growth o After 2015, aging population will create strains on China’s social system o 2030: Senior dependency rate to reach 25% (echoes rapid decline in fertility) o In rural areas, the elderly rely primarily on their children for financial support, where urban elderly rely on pensions. Most people live in intergenerational households. o Children are legally obligated to care for their parents in their old age o Rural elderly are often not covered by pension, have less overall income, and higher dependency rates due to youth outflow -> more rural elderly dependence o China struggling to set up a functioning and funded pension system (currently, it is being paid from the tax payment of current workers, which will become problematic with an aging population) o China will grow old before it has the opportunity to grow rich Conclusion  One-Child Policy: forced China though demographic transition at an accelerated pace and created an exceptional demographic window of opportunity for growth during the reform era  The One-Child Policy is also responsible for the problem that will challenge policy makers in the near future -> rapid rise in dependent elderly, gender imbalances, collapse of a credible government birth reporting system  A more relaxed policy would help relieve the trend of an aging population, and might be more effective in the long run Chapter 8: Labor and Human Capital  Under command economy: no labour markets  Now, the system of government controlled employment has dissolved and active labour markets have developed nationwide (downside was that it resulted in unemployment)  Challenges that China will face: upgrade quality of the labour force, adequately reward the skilled and talented, support an aging population as retirement increases  China’s labour force is in the middle of a transformation: from low-skill, hard physical labour to a more middle-income economy where education and skill begin to transform the nature of the work The Institutional Transformation of Chinese Labor The Labor Force  Enormous employed population (due to large proporti
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