Breaking the Curse of “the Last Generation”: Employment Structure and China’s Population Crisis

Abstract

It is widely acknowledged that the dangerously low birth rate threatens China’s future socio-economic stability. The existing literature typically regards China’s population crisis as a natural development trend, attributes it to family planning policies, or associates it with particular social, economic, and cultural conditions. Drawing from the social reproduction theory of feminist political economy, we develop a more encompassing analytical framework for China’s population crisis. We contend that the overarching context of China’s population crisis is the institutional transition from a balanced socialist social reproduction regime to an unsustainable developmentalist one. China’s employment structure is crucial to the structure of its social reproduction regime. Specifically, the formal economic sector facilitates a more accessible distribution of social reproduction cost for working-class families that maintains their willingness and ability to have children. Using provincial-level panel data from 1990 to 2021 and the General Method of Moments regression technique, we find positive, significant, and robust correlations between China’s formal sector employment and birth rate. These findings suggest that effective policies addressing China’s population crisis should focus on expanding the formal sector employment, expanding the social welfare system, and regulating the informal sectors.

Keywords:

• Birth rate
• employment structure
• social reproduction
• formal sector
• China

JEL Classification:

• J11
• J21
• O53

Acknowledgements

We would like to express our deep appreciation to Professor Minqi Li from the University of Utah for his invaluable support and insightful comments throughout the process of researching and writing this academic paper. His expertise and insights were crucial in shaping the content and direction of this work.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 One cannot solely attribute this to the change in age structure since the total fertility rate also stopped declining and stayed around 2.7 during this period.

2 The year 2019 is the last year with available data for detailed categories of informal employment.

3 Birth rate can be studied empirically by using individual/household micro-level data or by using city/county/provincial/country aggregate-level data. The purpose of the empirical study in this paper is to examine the long-run statical relationship between China’s birth rate and employment structure, controlling some other aggregated variables, such as housing price/income ratio, economic structure, and CPI. Considering the nature of the study and the data availability, we chose to provincial-level aggregated data.