| Abstract | In the past 40 years of reform and opening up, China achieves economic growth miracle and this miracle benefits from the “demographic dividend”, which brought about by the rapid demographic transformation (Cai, 2010). However, in recent years, China’s population aging has entered a stage of rapid development, and “demographic dividend” has gradually disappeared. It means that the traditional mode of economic growth, which relied on the advantages of population size and structure, has become unsustainable. So, on the stage of high-quality development, it is an important task for China’s economy to find new driving forces for economic growth. Accelerating human capital accumulation and transforming the population’s quantity advantages into quality advantages is undoubtedly an effective way to realize the transformation of economic development mode and promote high-quality development.
Under the above background, this paper studies how the population aging affects the human capital accumulation and economic growth under the different education financing pattern, and we then try to find the policy implication for China’s economic growth. The existing literatures show that the relationship between population aging and human capital accumulation, economic growth varies with the difference of education financing pattern, but few literatures have examined the (dis)advantages of private or public education financing pattern on human capital accumulation and economic growth at different stages of population aging. So, it’s extremely necessary to analyze this important problem theoretically. In addition, the existing literatures also have many shortcomings in the construction of the theoretical models, so it is important to incorporate more realistic economic factors in a new model. Therefore, we try to build a new Overlapping Generations (OLG) model under the two different education financing patterns (private and public pattern) to capture stylized facts of China’s economy. In this model, we consider schooling time, physical capital investment in human capital accumulation function and social security system. After building this model, we could try to explain that in the 1990s, how the transition of China’s education pattern impact on human capital accumulation and economic growth from the perspective of population transformation. To our best acknowledge, there is no paper to do this job from this perspective, which also constitutes the contribution of this paper.
By theoretical analysis and numerical simulation, this paper finds that: (1) Under the private education financing pattern, the population aging, which caused by rising life expectancy, will increase schooling time, but it will have a negative impact on household education investment rate, and eventually there exists an inverted U-shaped relationship between population aging and economic growth. (2) Under the public education financing pattern, each family’s educational expenditure is given by the government, population aging mainly promotes the human capital accumulation and economic growth by improving schooling time. (3) When the population aging is a not very serious problem, the private education financing pattern can obtain higher economic growth rate than the public education pattern, but when the degree of population aging rises to a certain critical point, the public education pattern can in turn achieve higher economic growth rate than the private education pattern.
Some policy implications we can conclude from this paper. On the one hand, we can explain that why the transition from public education financing pattern to private education financing pattern, which started in the 1990s, has effectively promoted economic growth from the perspective of demographic transformation. On the other hand, we can also provide policy reference for how to mitigate the negative impact of population aging in the future. That is, in the aspect of public policy, the government can increase the ratio of public education investment, transfer the current private education pattern to public education pattern in appropriate time, so as to improve the speed of human capital accumulation and cope with the negative impact of the increasingly serious problem of population aging on economic growth.
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