Unlocking the Second Demographic Dividend

Since the beginning of reform and opening up, China’s rapid economic growth has been accompanied by a demographic transformation favorable to growth. With the removal of institutional barriers that prevented the efficient allocation of factors of production, favorable changes in the age structure of China’s population, increased quantity and quality of labor, a high savings rate, a high return on investment and resource reallocation, such as labor, became the sources of unprecedented growth in this period. Thus we can say that the economic growth in this period came from demographic dividend. For example, in the period between 1980 and 2010, during a window of opportunity characterized by a rapid increase in working-age population and zero growth in other population groups, China’s GDP grew at an average annual rate of 10.1%.