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Aging and U-shape of Service-Industry Relative Size
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TitleAging and U-shape of Service-Industry Relative Size  
AuthorMao Rui,Xu Jianwei and Zou Jingxian  
OrganizationZhejiang University;Beijing Normal University;Renmin University of China;; 
Key Wordsage structure of workers; employment ratio; structural change 
AbstractThis paper studies the relationship between age structure of labor and relative size of service-industry structure. Based on the cross-country panel data, empirical evidences suggest the relative size of services to industry increases when the age structure of workers grows old. The overlapping generation model developed in this paper discloses the two mechanisms behind, “size effect” and “composition effect”, that the former works through demand and supply-demand side, while the latter functions through supply side. In equilibrium, the “size effect” dominates, thus making aging leads to the rise of service relative to industry sector. In this paper, we do the calibration based on China’s micro data and it fits the historical data well. Lastly, based on the forecasts on population, we apply our theoretical framework to predict China’s sectoral employment shares. 
Serial NumberWP1341 
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