Vysoká škola ekonomická v Praze Národohospodářská fakulta
Hlavní specializace: Národní hospodářství
Analysis of the impact of family planning on China’s economy
Bachelor thesis
Author: Huang Yichen
Thesis supervisor: Ing. Lukáš Augustin Máslo, Ph.D.
Year: 2019
I declare that I have written this thesis by my own, with the help of the cited literature.
HUANG YICHEN
In Prague, May 12,2019
Acknowledgments
I would like to thank my supervisor Ing. Lukáš Augustin Máslo, Ph.D.
for her mentoring and guiding throughout the process of writing this thesis.
Abstract
The implementation of China’ s one-child policy has been a whole generation, which produces not only the effect of controlling and slowing down population growth but also a very high social cost. This thesis uses CPI, national savings rate, the pension system, healthcare level, per capita disposable income and education level to analyze the impact of family planning on China's economy. After the econometric model, the author comes to a conclusion that the average family size has a negative impact on China's economy. In the regression analysis, family planning has a negative impact on GDP at the significant level of 0.1, it also has a negative impact on GDP growth rate at the significant level 0.1. Family planning in China has reduced the size of the family and has a favorable effect on growth for the Chinese economy. This thesis also introduces the disadvantages of family planning in China. At the end of the article, it also introduces the second-child policy which opened in 2015.
JEL Code J13 C12
Keywords
Family Policy, Economic growth, Demographic dividend, Population development
Abstrakt
Politika jednoho dítěte v Číně byla realizována po celou generaci, která nejenže ovlivňuje a zpomaluje růst populace, ale také vytvářejí vysoké sociální náklady. Tato diplomové práce využívá CPI, míra národní spoření, důchodový systém, úroveň zdravotní péče, disponibilní důchod na obyvatele a úroveň vzdělání analyzuje dopadu plánovaného rodičovství na čínskou ekonomiku. Po ekonomického modelu, autor získává závěr, že průměrná velikost rodiny má negativní dopad na čínskou ekonomiku.
V regresní analýze je negativní dopad plánovaného rodičovství na GDP na významné úrovni 0,1 a jeho negativní dopad na tempo růstu GDP je na významné úrovni 0,1.
Plánování rodiny v Číně snížilo velikost rodiny a mělo pozitivní dopad na hospodářský růst Číny. Tato diplomové práce také popisuje nevýhody plánování rodiny v Číně.
V závěru práci také popisuje politiku druhého dítěte, která byla zřízená v roce 2015.
Klíčová slova
Ekonomický růst, Populační vývoj, Rodinná politika, Demografická dividenda
Table of Contents
Introduction...1
1.Theoretical part... 2
1.1 History of Chinese Family Planning... 2
1.2 Relationship between population growth and economic development... 4
1.2.1 Population Pessimism theory... 4
1.2.2 Population optimism theory... 5
1.2.3 Moderate population theory... 5
1.2.4 Human capital theory... 6
1.3 The negative impact of family planning on China... 7
1.3.1 Human Rights Issue... 7
1.3.2 Aging Population... 10
1.3.3 Labor shortage...13
1.3.4 Other Problems...15
1.4 The positive impact of family planning on China... 17
1.4.1 Suppress population growth...18
14.2 Improving the quality of the entire population...21
1.4.3 Optimizing the natural resources...25
1.4.4 Promote economic development... 27
2. Practical Part... 31
2.1 Analyze the impact of economic factors related to family planning on the Chinese economy... 31
2.1.1 Data source and sample selection...31
2.1.2 Model settings and variable definitions... 31
2.1.3 Practical results and analysis...32
2.2.Analysis of the impact of CPI（base year=1978）and per capita disposable income...42
2.3 Analyze the impact of China’s pension deficit...46
2.4 Analyze of the impact of China's second child policy... 50
Conclusion...52
Bibliography...54
Introduction
China is approaching the issue of “population bombs”. The population of mainland China has grown rapidly from about 500 million people in 1950 to about 1 billion people in 1980. During the nearly 40 years from 1980 to 2018, although China implemented a strict one-child policy, the population still increased by 400 million to the current total population of about 1.4 billion. In another 10 years, the population over the age of 60 in China will exceed the total population of the United States. The Chinese labor force is shrinking and the number of newborns is insufficient.
The low fertility rate caused by the family planning policy has enabled make Chinese population to rapidly transform in a short period of time. This alleviated the pressure on society, economy, resources and the environment caused by the rapid growth in population. The decline in fertility rate, on the microeconomic level, is conducive to improve the quality of child care in family, to achieve the substitution of children's quality to the children's quantity, and thus to improve the overall population quality; on the macroeconomic level, it is conducive to raising the social savings rate, and then promote economic growth. The demographic transition has played a positive role in promoting China's per capita GDP and per capita savings rate.
As mentioned above, the family planning policy has brought huge demographic dividends to China, but at the same time, its negative effects have accumulated over the past few decades and they are expanding. The “one child” policies control the number of births, it kept the fertility rate at a very low level for a long time in China, which has formed a problem of gradually decreasing the proportion of children in China and increasing the aging of society.
According to Gary Becker's theory of human capital, the authors conclude that families are more likely to save because of the one-child policy, and they have more money to invest in their children. This allows children to have a higher quality of education, thereby increasing labor productivity and human capital. Finally, increase economic growth.
This also poses a challenge to the traditional family pension model (especially rural
will put a great burden on children's future life. Moreover, under the social influence of the “boy preference”, the control of fertility rate makes the sex ratio of social birth seriously deviate from the normal fluctuation range. Therefore, the family planning policy has seriously affected the population structure of China—age structure and gender structure. The problem with the age structure is that the aging problem is increasing, and the problem with gender structure is that the sex ratio was imbalance for a long time. Both the aging of society and the rise in the sex ratio have had a negative impact on the Chinese economy. Because of “boy preference”, it also leads to high abortion rates in China, such as women's selective abortion. This still has a relatively negative impact on the Chinese economy.
This thesis wants to determine the impact of family planning on China's economy through econometric models, mainly through family size and China's GDP growth rate to determine whether family planning has a positive impact on the Chinese economy. In the practical part, it also analyzes the impact of CPI, savings rate, education, healthcare care, and per capita disposable income on China's economy. This thesis directly analyzes the impact of age structure changes on economic growth, savings, consumption, labor structure, and human problems in theoretical part. At the same time, I want to determine the shortcomings of family planning and how to correct it.
It is generally believed that the "one child" policy cannot cope with the future economic and social development situation, and it is difficult to solve the more serious problems of social aging, gender structural imbalance and long-term economic growth in the future. Therefore, China has opened up its second child policy. They believe that the appropriate relaxation of birth restrictions can alleviate the serious social aging problem in the short term. If the Chinese population need to keep balanced in the long-term development, we need to study in depth the coordination between population and economic development.
1.Theoretical part
1.1 History of Chinese Family Planning
If someone mentions China, the first impression is that the population ranks first in the world. When China was first established, the population was only 540 million. At that
time, there was no policy of family planning, the population grew unorderly, and the population growth rate had reached 20%. The population growth rate is an important indicator reflecting the speed of population development and the formulation of population plans. The population growth rate of developed countries has grown by less than 0.5%. Through this comparison，we can see that China’s population problem is becoming more and more difficult, and it is imperative to control the population.
In the 1960s, China entered the second birth peak after the founding of New China.
From 1962 to 1972, 300 million people were born. In 1969, China's population exceeded 800 million. Since the 1960s, the contradiction between population and economy, society, resources and the environment has gradually emerged. In view of this situation, the Chinese government has proposed family planning to promote the use of contraceptives. However, due to the seriousness of the population problem, the government has not established a clear population policy, so family planning has not been effectively implemented nationwide.
Since the early 1970s, the Chinese government has become more and more aware that population growth is too fast for economic and social development. It has decided to implement family planning in urban and rural areas across the country, and family planning has entered a new stage of development.
At present, China's cultivated land area is only 1/10 of the country's land. In comparison, India's cultivated land accounts for 55% of the country's land, and the per capita cultivated land is twice that of China. Although the US cultivated land only accounts for 20% of the country's land, the per capita cultivated land is 9 times than China’s. China and the United States and India are both major food producers in the world. Under the conditions of less cultivated land than the United States and India, China’s grain output still ranks first in the world, and grain yields are much higher than the world average. But due to China’s population, almost five times the United States, the per capita food possession is less than the US's 1\4. In 1993, although China's grain production was bumper, the per capita possession was only 387.3 kilograms. Forecasts indicate that as the population size will continue to expand, China's per capita food will remain at a low level of fewer than 400 kilograms per capita. If China cannot effectively curb the excessive growth of the population and cannot alleviate the enormous pressure
environmental degradation will be inevitable in the next few decades, which will undoubtedly jeopardize The vast majority of Chinese people’s living condition and sustainable socio-economic development.
The population growth also enhances the ability of humans to influence the natural environment, which causes global climate change, resource depletion, and environmental pollution. Many contradictions in the global population, resources, environment, and development are becoming the most serious challenges facing human survival and social economic development. The world's population growth in the 20th century is the fastest-growing era in human history. With the rapid economic growth, the rate of world population growth has also accelerated. The world population has increased to 6 billion in the late 1990s. The world's population is still growing at an annual rate of 80 million. If we continue at this rate, by 2100, the world population will double again, reaching 10.4 billion, even 14 billion. After 2500 years, the total mass of the population will exceed the total mass of the Earth. If population growth is out of control and the population is too large, it will put tremendous pressure on the environment. In order to support a large number of people, human beings will break the laws of nature, constantly destroy the natural environment and exploit natural resources in a predatory manner. Eventually caused uncontrollable destruction.
In a developing country with a large population like China, the challenge of population issues is not only related to the survival and development of the Chinese nation but also related to the stability and prosperity of human society. How does China meet this challenge? Why should China make strategic decisions on family planning, what kind of policies and measures are adopted in the process of family planning, and how effective it is. In order to achieve sustained economic growth and sustainable development, and to meet the growing material and cultural needs of all people, the Chinese government has chosen the strategic decision to implement family planning.
1.2 Relationship between population growth and economic development
The economy is the foundation of the existence and development of the population. Its development status is about the development of the population. As the main body of the economic society, the population directly affects the level and structure of economic
development from both production and consumption. As one of the basic problems of human society, the relationship between population growth and economic development has been heatedly debated for a long time. Scholars with different opinions have proposed different population policies based on their own theories.
1.2.1 Population Pessimism theory
The Principles of Population made Malthus (1798) a pioneer in modern population theory. The “Malthusian Population Trap Theory” believes that population growth makes the economy in an equilibrium state of survival. Humans must control the growth of the population. Otherwise, poverty is the unchangeable fate of mankind. Malthus also mentioned that poverty and sin in society are not caused by socio-economic and political systems, but by the role of the laws of the population. Without preventive population control, the economic level will never be improved. Therefore, Malthus advocates preventing population growth through positive measures (war, famine, etc.) and preventive measures (controlling birth rates), thus allowing the economy to leave the long-term stagnation. Malthus wrote, “The table of nature is laid for a limited number of guests and those who come uninvited must starve.”After Malthus, there were many modern Malthusian, including the Roman Club.
1.2.2 Population optimism theory
When the Great Depression occurred in the United States, The famous British economist Keynes(1936) used the theory of employment interest and money to explain the crisis and unemployment, which analyzed the relationship between population growth and economic development. Population consumption, as an important part of
“effective demand”, largely determines the amount of demand. Therefore, Keynes believes that population growth It can stimulate people's effective demand for investment and consumption, thus changing the situation of insufficient demand and avoiding the crisis. He pointed out that population growth has a positive impact on economic development. From the perspective of the capital demand
formula, . The represents capital demand, P represents the population, Y/P represents the income per capita, K/Y represents the capital coefficient.
So capital needs the influence of population, living standards and capital technology.
And population growth and capital demand growth are a positive relationship.
Therefore, in order to ensure the balance of employment, Keynes proposed reforming the distribution system, equalizing the distribution of wealth, reducing the proportion of savings in income, and increasing the same proportion of consumption, thus stimulating the increase in demand.
1.2.3 Moderate population theory
In the 1880s, the British economist Cannan pointed out that the number of people needed to maximize industrial returns was a moderate population according to the law of diminishing marginal returns. Moderate population theory is different from Malthus's pessimistic theory of population growth and Keynesian optimism. It starts from industrial income and proposes that too much population is not conducive to economic development. Only moderate quantity is the best, corresponding to moderate population control theory. He emphasized that the number of people who can survive in a certain area of land for a certain period of time and is suitable for obtaining the maximum productivity of the industry. That is to say, the population at the time of achieving the maximum benefit of the industry is a moderate population. In his view, the moderate population changes with the change in maximum income. The way to reach a moderate population is to implement contraceptive measures such as contraception when the population is growing too fast.
1.2.4 Human capital theory
Since the mid-1960s, Schultz and Beck have advocated human capital theory, and have shifted the discussion of population and economic relations from quantitative to qualitative. It is no longer simply that population growth is conducive to or not conducive to economic development, but rather to the intrinsic quality of the population, pointing out that the size of human capital is the key to economic development.
Therefore, instead of focusing on the population, it is strongly advocated to increase people's production skills and improve the quality of the population. Becker believes that every family must have more children on a limited resource base. According to the principle of maximizing practicality in the family, it proves that the quality of the child
can replace other parents' purchase of other consumer goods. Children's quality and quantity explain the population growth by exerting the best mutual substitution relationship through shadow prices, interaction with human capital investment. Becker believes that fertility rates in developed countries have declined. On the one hand due to economic growth. The value of time increases and the time value of married women increases, resulting in a decrease in the number of children and an increase in quality.
On the other hand, as the economy grows, children's return on investment will also increase. The increase in human capital investment return will encourage more investment in children. Regarding how to reduce the excessively fast growth rate of developing countries, Becker believes that in addition to taking measures to reduce the investment cost of children in ordinary households, the wage system also should be improved. Increase the wages of skilled workers to stimulate labor productivity, improve people's investment choices, increase human capital investment, and reduce population supply.
In general, the above theories have its own rationality, but because it is proposed in each specific context, they reflect the realities of population economic development in different historical stages of the West. As far as China is concerned, it should be based on the actual demographic economic situation and formulate a population policy that suits China's national conditions.
1.3 The negative impact of family planning on China
The low fertility rate caused by the family planning policy, it makes the Chinese population to rapidly transform in a short period of time. Although the family planning policy has brought huge demographic dividends to China, but at the same time, its negative effects have accumulated over the past few decades.
1.3.1 Human Rights Issue
Human rights are an important category of modern society. Fertility is a basic right of people. People have the right to decide whether to give birth and have children. Human rights are the rights that everyone has. This seems to be a very simple question. With the development of capitalism, rights and rights awareness has developed. However,
China is a socialist country and its awareness of legal rights including human rights are relatively slow. For a long time, human rights and other words were directly criticized as negative hypocrisy of the bourgeoisie. Later, in the early 1990s, with the end of the Cold War, it became a sensitive word again. In the last year or two, the Chinese government finally recognized that human rights are the objective existence of modern countries.
First of all, Engels believes that all people, as human beings, have something in common, and within the scope of these commonalities, they are equal. This equality requirement should be: all people, at least all citizens of a country, or all members of society, should have equal political status and social status.
Second, human rights are an evolving, dynamic concept. On the one hand, human rights issues will expand and spread within a country as society develops. On the other hand, with the advancement of society, the scope of human rights itself will also grow and expand.
But to be fair, for historical reasons, in general, the human rights situation in developing countries is relatively lagging behind developed countries. This is a practical issue that should not be debated.
Compared with the old China, the tremendous progress of the human rights situation of the Chinese people is also an objective fact. For example, in the early 1950s, Chinese women never had freedom of marriage, and people's freedom of contraception and birth control was also regarded as a category of democratic rights. In 1956, a document from the Ministry of Health of the Central People's Government stated:
"In July 1954, the Ministry of Health issued a notice on No. 579, confirming that contraceptive methods can be freely adopted by the people, but it has not been clarified.
It is necessary to know that contraception is a democratic right of the people and should be freely used by the people. The government should prepare all the conditions to come.
Guide and solve the needs of the masses for contraception……"
However, democracy is a political category. It is relative to autocracy and dictatorship.
appropriate to include human rights in democratic rights. It is also very reluctant to raise contraception and birth control to the level of democracy.
In the late 1970s, the Chinese government formulated laws and regulations to restrict the reproductive behavior of the people, and family planning was changed from advocating compulsory. The compulsory family planning of the Chinese government has been criticized by the international community. Because modern countries and international organizations have recognized reproductive rights as a basic human right before the implementation of compulsory family planning in China. Here are a few examples:
①Resolution No. 2211 (XXI), adopted by the UN General Assembly on December 17, 1966:
... States should take full account of the principle that the size of the family should be freely determined by each family when exercising the sovereignty of formulating and implementing their own population policies.
②Article 16 of the Tehran Declaration adopted by the World Conference on Human Rights in Tehran on May 13, 1968:
Parents have the freedom to responsibly determine the number of children and the basic human rights at birth.
③The World Declaration on Progress and Development, adopted by the UN General Assembly on December 11, 1969:
Parents have the exclusive right to decide the number of children and the birth interval freely and responsibly.
④Paragraph 14 (f) of the World Population Plan of Action adopted by the United Nations World Population Congress, held in Bucharest on August 19-30, 1974:
All couples and individuals have the right to freely and responsibly determine the number and spacing of their children and the information, education, and methods needed to obtain such decisions...
Reproductive rights are at the heart of human rights, especially women's human rights.
Reproductive rights derive from the fundamental human rights of all individuals and couples, that is, decisions about fertility are not made without discrimination, coercion or violence. These include the highest standards of health rights and the right to determine the number of children, birth time and interval. The international human rights system continues to emphasize the centrality of reproductive rights. Reproductive rights are considered not only valuable in their own right but also play a key role in the ability to have other fundamental rights.
I don't think it is necessary to pull this quote longer. It has already shown that the international community regards the number and timing of the free choice of children as a basic human right.
So the conclusion is that the family planning law is a law that contradicts the principle of human rights.
1.3.2 Aging Population
The family planning policy has indeed achieved good results in controlling population growth. However, while the population-increasing crisis has been slowed down, another crisis, the aging of the population, has arrived early. And the extent of China's aging population continues to deepen.
At present, the total number of elderly people over the age of 60 in the world reaches 600 million, of which China accounts for nearly 30%; in 2010, the average proportion of people over 65 years old in developing countries is 5%， and China is 3.87 percentage points higher. From the beginning of the aging population to the peak period, the United States has spent 95 years, while China only needs less than 40 years.
In China, by the end of 2018, the population of people aged 60 and overreached 249.49 million, accounting for 17.9% of the total population. At the same time, by the end of 2018, the population of the country aged 0-15 was 249.49 million, accounting for 17.8%
of the total population.
"This is the first time in China's history that the proportion of the elderly population has exceeded the proportion of the population of the children." The famous demographer He Yafu said in an interview with the Times Finance.
"There are two main reasons for the aging of the population: First, the life expectancy of the elderly population is prolonged, and the proportion of the elderly population is increased. Second, the birth rate is declining, which reduces the number and proportion of children." He Yafu said in the financial analysis that the elderly population has a prolonged life. It is the result of comprehensive advances in medical technology and improved living standards. We cannot shorten the life expectancy of the elderly in order to alleviate the aging crisis of the population. Therefore, the fundamental measure to alleviate the aging crisis is to increase the birth rate. Now China's birth rate has dropped for two consecutive years. If we do not encourage to have more baby as soon as possible, it is expected that China's birth rate will continue to decline in the next few years.
The rise in the proportion of the elderly population has increased the burden of the working-age population and brought challenges to economic development and social security. The accelerated aging of the population is directly related to the family planning policy: the family planning policy has strongly reduced the fertility rate of the population. Until now, China's fertility rate has been at a very low level of international fertility rate for many years. Another consequence of the continued development of an aging population is the rising elderly dependency Ratio and increased pressure on the labor force. The age dependency ratio is calculated as follows: Age dependency = (people younger than 15 and older than 64) / (working age people ages 15-64). As far as developing countries are concerned, China's elder dependency ratio in 2016 was 38.55%, and it will rise to 61% in 2050. A higher value for age dependency ratio means that employed people have to support more non-working people, either young or old.
By then, the number of laborers who supporting an elderly person will be reduced from
7 to 4. The following data are shown as the proportion of dependents per 100 working- age population.
Picture 1-1.Change in China’s Age dependency ratio from 1979-2015
Data Source:World Bank https://www.theglobaleconomy.com/China/Age_dependency_ratio/
The impact of population aging on various aspects is as follows: at the economic level, the labor force is decreasing, the average age of the labor force is rising, the relevant production methods and labor technology needs are changing, and the aging working conditions will be improved. At the same time, the old industry has become a new economic growth point in recent years. At the social level, the size of the family is relatively small, and the supply of the younger generation is reduced, which will challenge the pay-as-you-go pension system. In terms of medical care, China has shifted from infectious diseases to chronic diseases – the latter group is the elderly. The aging of the chronically diseased individuals in the whole society continues to increase, which means that China's future medical service model needs to be changed. The medical system should be based on the existing large hospitals and treatments as the core of
prevention and rehabilitation management. When dealing with aging population, we can be divided into two stages: the first stage is built like an old service system, like the old people's clothing, food, shelter, and transportation are guaranteed. The second stage needs to re-recognize the definition of the elderly and work hard to make this group Human capital and economic capital are developed and utilized.
1.3.3 Labor shortage
Along with the rising proportion of the elderly population, in recent years, China's labor participation rate has gradually shifted from supply balance to supply shortage.
According to economists' estimates, if China's current family planning policy remains unchanged, then in the 10 years from 2012 to 2022, China's young and middle-aged labor force will be reduced by 100 million! And the labor participation rate in China has also begun to decline in recent years. In 2016, China's labor participation rate was 70.8%, down 6.7 percentage points from 77.5% in 2000. In 2030, China's labor participation rate will drop to 65.3%, and will further decline to 60% by 2050... It can be seen that as the population ages, the economic growth rate shows a downward trend, and the labor participation rate also begins to decline. In addition, the labor participation rate is affected by many factors.
Foreign scholars' research on the impact of population aging on labor participation rate has many positive views and negative effects, and there is no consensus. Some scholars believe that the aging population has a negative impact on labor participation rate.①Prescott (2004) compared France with the United Kingdom, the United States and other countries, and finally concluded that the deepening of aging will lead to an increase in the payroll tax rate, which will encourage companies to reduce the demand for labor, while still increase the willingness of workers to retire early, and ultimately lead to a decline in the labor participation rate of the entire society.②Mosisa & Hipple (2006) consider that the aging of the population structure will have an adverse impact on the labor participation rate. His specific conclusion is that although the labor participation rate in the age group of 55 years has risen sharply, the labor participation rate of young and middle-aged people is declining year by year. The overall level of labor participation rate is still falling. ③Giles et al (2012) analyzed the CHARLS data
and concluded that middle-aged and older people over the age of 45 chose to retire earlier than before, which contributed to the decline in the labor participation rate.
On the contrary, some scholars believe that population aging has a positive impact on labor participation rates. ①Landis et (2004) studied the impact of Japan's aging development on society from the perspectives of the economy, immigration policy, wage income, health, etc., and concluded that due to average expectations, life expectancy, the increase in the labor participation rate of older workers will inevitably.
②Austin (2004) through empirical studies in Australia found that the continued development of aging population will increase the time for women and older people participate in market labor, and the labor time of part-time workers will increase significantly in the market.③Fougera & Merette (1999) argues that in the long run, an aging population can lead to an increase in the quality of labor supply and thus an increase in labor supply. ④Serban (2012) takes the EU as the research object and concludes that the relative aging of the labor market will be difficult to adapt to the conditions of economic globalization and increase the human capital to reduce the vulnerability of the labor market aging. In other words, the deepening of aging will lead to mass production of labor.
Picture 1-2. Changes in China's labor participation rate from 1990 to 2017
Data Source:World Bank https://www.theglobaleconomy.com/China/Labor_force_participation/
The indicators are from The World Bank provides data for China from 1990 to 2017.
From this picture, we can see the average value for China during that period was 74.52 percent with a minimum of 68.93 percent in 2017 and a maximum of 79.13 percent in 1990. The labor force participation rate is the percent of the population ages 15 and older that is economically active. That includes employed and unemployed individuals.
Despite China's economic and social development quickly in the past few years, China's labor force participation rate has declined, but the overall labor force participation rate is higher, mainly because China is in a transition period from a planned economic system to a market economy, and the level of economic development is not high enough, increasing in population aging. All aspects of social security systems, such as medical and health systems, education systems, welfare systems are imperfections. At the same time, the overall education level of laborers is not high, and the quality of laborers is low, which also results in a situation in which China's labor force participation rate is low but the unemployment rate is high.
If we want to solve this kind of problem, on the one hand, we can improve China's retirement policy. The legal retirement age for men is 60 years old and for women is 55 years old. Although a considerable number of workers have reached the statutory retirement age, they are able to continue to work regardless of physical function or work experience. The government can give them the freedom to choose whether or not to continue working. On the other hand, improve social welfare policies and expand the scope of the safeguard system. As a result, welfare policies increase the attractiveness of labor into the labor market. It is also possible to increase wages reasonably, thus ensuring some people who did not join the employment team to start choosing jobs and promote the increase in the labor participation rate.
1.3.4 Other Problems
Family planning still brings many problems to China, such as gender imbalance, the high abortion rate.
According to the authoritative data released by the National Bureau of Statistics report
"Women and Men in Chinese Society", the sex ratio of the birth population in China was 108.50 in 1982. By 2000, the proportion had risen to 116.90, and in some regions even reached 135.60. The sex ratio of the birth population is generally stable between 103 and 107. What does the gender imbalance in the birth population mean? It is not just a population issue, but also a serious social problem. For example, the phenomenon of trafficking in women and the sale of marriage has increased, the rate of sexual crimes has risen, the stability of the family has been affected, and various social unrest factors have increased.
There are many reasons for the imbalance of the sex ratio of the birth population.
However, I believe that it is mainly influenced by the traditional thoughts of the descendants. In the history of China, people believe only the son can inherit the lineage.
Because ancient Chinese society belonged to the patriarchal society, and women basically had no rights. And because China's economic and cultural development is unbalanced, some regions are relatively backward and most regions have a large demand for male labor, that's why leading to selective abortion. Because pregnant women can't set men and women according to their own wishes before pregnancy, so many people use modern technology and medical methods to identify the sex of the fetus after pregnancy and choose the fetus artificially, retain the male fetus, and terminate the female fetus. Of course, there must be objective reasons for this situation, but the traditional concept of fertility are the main sources of imbalance in the sex ratio of newborn babies. In this case, it also causes a high abortion rate. According to the above questions, the Chinese government severely prevented infant sex identification. If there is a violation, a fine will be imposed. I think if we want to solve the problem of gender imbalance, it is especially important to change the minds of Chinese people to promote equality between men and women, reduce gender discrimination in China. The opening of the second child policy has also alleviated the psychological pressure of many parents so that they are no longer to worry about the gender of the fetus.
The other problem is the high abortion rate. Data released by China's National Family Planning Commission, as reported by China Daily, show that "13 million abortions are performed each year, for an average rate of 35,000 abortions per day—overwhelmingly
girls’’. There are two main causes of abortion in China: one is accidental pregnancy; the second is sex-selective abortion.
Picture 1-3. Number of Abortion statistic worldwide
Source: http://www.allgirlsallowed.org/forced-abortion-statistics
Abortion has always been a controversial topic. In some countries, abortion is prohibited, such as Brazil and Ireland. According to their laws, women are prohibited from abortion in the absence of a major risk to life; in some countries, abortions are allowed, such as in France and Germany, freedom of abortion is seen as a historic advancement in women's liberation. China has a laissez-faire attitude towards abortion and does not intervene involuntary abortion. The implementation of "family planning"
has used abortion as a means of controlling fertility and has become a remedy for contraceptive failure. So we can say: China's one-child policy leads to forced abortions.
Because the husband and wife are unwilling to pay the fines for the extra children. At the same time, abortion as an operation, people gradually forget its harm to women.
Abortion is not only dangerous but may also cause serious sequelae, such as
In all human rights, the right to life transcends all the other rights - I think this is obvious. Women’s rights should be respected, but it should not before the right to life of the fetus. So the fetus is not just an extension of a woman's life or just a part of her body.
Think about it: Suppose you think that alcoholism is morally reasonable (such as physical autonomy). If a pregnant woman drinks alcohol, her child is passively drinking alcohol before birth and may be damaged. You may feel that this matter is morally problematic. However, if the fetus is only an extension of her own body, alcoholism during pregnancy should be no different from male alcoholism or non-pregnancy alcoholism.
And the fetus's dependence on the mother does not mean allowing the mother to deprive the baby of life. In many areas, especially in China, selective abortion is an important factor in worsening gender equality. The idea of patriarchal women is implemented at the lowest cost through selective abortion, threatening the survival of many female fetuses.
1.4 The positive impact of family planning on China
In the past 30 years, China has implemented family planning, and the economy was still underdeveloped. It has achieved recognized success under the goal of achieving low growth and low fertility levels. China's population accounts for one-fifth of the world's population. As the most populous country in the world, China's birth policy has not only had a tremendous impact on the country's economic development and people's lives but also has important international significance. So control the population growth will also play an important role in the development of human society as a whole. As one of the basic national policies, family planning has affected generations of Chinese. What benefits does this policy bring to us? There are probably four things: one, controlling the population; the second, improving the quality of the population; and the third, promoting economic development and optimizing the resources. The fourth, increasing the living standard such as education level and healthcare level .this article will first talk about the impact of family planning from the perspective of controlling the population.
1.4.1 Suppress population growth
Since the founding of the People's Republic of China in 1964, the population of China has increased from 500 million to 700 million in 15 years. It takes an average of 7.5 years for each additional 100 million people. From 1964 to 1974, China's population grew at a very high level. In 10 years, the population increased from 700 million to 900 million. The time for each increase of 100 million people was shortened to 5 years. In 1973, China implemented family planning nationwide. From 1973 to February 1995, the population of China increased from 900 million to 1.2 billion, and the time required for each additional 100 million people was extended to about 7 years. Since the 1990s, although China has been at the peak of its third birth since 1949, the number of women in the 20- to 29-year-old boom has averaged more than 100 million a year. The fertility potential of such a large birth population is enormous. However, as China's current population and family planning programs and policies have been understood and supported by the people, with the development of China's economy and society, people's fertility levels have been declining, effectively curbing the momentum of excessive population growth.
After nearly 30 years of hard work, China's rapid population growth has been effectively controlled. The birth rate and natural growth rate of the population dropped from 33.4 and 25.83 in 1970 to 15.23 and 8.77 in 1999, respectively, entering the ranks of countries with low fertility levels in the world. In the case of economic underdevelopment, China has achieved a historic transition from high deaths rate to low deaths rate, high growth rate to low growth rate in a relatively short period of time. In 11 years, China has completed the achievements that some developed countries have completed in decades or even hundreds of years.
The decline in fertility is one of the most fundamental social changes in human history.
Therefore, it is particularly surprising that this transformation does happen so quickly.
Picture 1-4. China- Fertility rate from 1960-2016
Data Source: World Bank https://www.theglobaleconomy.com/China/Fertility_rate/
Under family planning policy, the development of family planning has ensured the growth of our population orderly. Since the implementation of the family policy in the 1970s, in addition to the upward trend of natural population growth in the early years of the 1980s, the natural growth rate of China's population has been declining (see picture 1-4 for details). The abnormal changes in the population in the 1980s, on the one hand, were influenced by the inertia of the birth peak in the mid-1960s, and on the other hand because of a reaction to the tightening of the family planning policy.
Picture1-5. How long did it take for fertility to fall from more than 6 children per woman to fewer than 3 children per woman?
Source: Our World in Data https://ourworldindata.org/uploads/2014/02/Years-it-took-Fertility-to-fall- from-6-to-below-3.png
The chart above shows the rate at which fertility declines. As we can see from the chart above, it took Iran’s 10 years for fertility rate dropped from more than 6 children per woman to less than 3 children per woman. After the implementation of the one-child policy, China achieved this transformation within 11 years.
At present, China's urban population has basically achieved a transition to a low-fertility, low-death, low-growth population, and the rural population is in the process of this transformation. According to information provided by the United Nations, China's population growth rate is far below the average level of other developing countries in the world. According to relevant experts, if China does not implement family planning, it still maintains the birth level in the early 1970s, and now China's population may have exceeded 1.6 billion. For more than 30 years, China has implemented family planning, created population conditions conducive to economic reform, social and economic development, and guaranteed China's survival and development.
Picture 1-6. China -Percent of World Population
Data Source: World Bank: https://www.theglobaleconomy.com/China/population_share/
The proportion of China's population to the world's population has gradually declined.
The proportion of China's population to the world's population has been declining since the early 1980s, from 22.8% of the world's population in 1980 to 20.84% of the world's population in 2000. In the past 20 years, it has dropped by 1.24 percentage points. The contribution of China's family planning policy to the world population is evident. In the past 20 years, the population of India has been increasing in the world. From 14.93% in 1980 to 16.77% in 2000, it has risen by l.84 percentage points. According to experts' predictions, by 2050, China's population will drop from one-fifth of the world's population to one-seventh and take off the hat of the world's most populous country.
India will instead of China become the most populous country.
14.2 Improving the quality of the entire population
Why can we improve the quality of the population if we have fewer children? One explanation is that assuming that the total expenditure remains the same if the number
the assertion made by Nobel laureate Gary Becker and his collaborator Gregg Lewis's classic "quantity-quality" alternative model. They believe that the reduction in the number of children born will increase the quality of their children (human capital). Most of the early studies supported this theory. However, many recent studies, which have been studied in specific countries, have yielded inconsistent, or even opposite results with the "quantity-quality" surrogate model. The scholars' explanation is that after raising a few children, the experience and efficiency of raising children will increase, and the increase in resources spent on each child is limited by the law of marginal decline. Children may not necessarily reduce, and may even increase the child's human capital. Can the above models and expressions be applied to China where culture and fertility concepts are different? Taking the physical quality and education level as the starting point, we will see the result below.
The government's earliest reason for promoting family planning is to protect the health of mother and child. For a family, there are fewer children, and on average, more money and time can be spent on other people. This, in turn, ensures that everyone has relatively more adequate nutrition. For China, where the problem of food and clothing was not yet resolved, this reason seems quite attractive. So, can population control really improve people's physical fitness?
Wu Xiaoyu and Li Lixing of the Central University of Finance and Economics in 2011 studied the relationship between maternal health and the number of children. After using the 1993-2006 China Health and Nutrition Survey (CHNS) data and excluding the influence of ethnic, income, education and other factors, they found that if the number of children is reduced, the mother can indeed get more resources and become healthier.
Liu Haoming of the National University of Singapore studied the relationship between the number of children and the health of children. He used data from rural residents in the same survey and controlled factors such as family background, parental height, and income, and found that the height of the child was inversely proportional to the number of children
Picture 1-7. China- Life Expectancy
Data Source: World Bankhttps://www.theglobaleconomy.com/China/Life_expectancy/
As an important indicator to measure the health and medical level of a country's residents, China's average life expectancy has been significantly prolonged since implementing family planning. The level of medical security for Chinese residents has also been continuously improved, and the expenditure on health care for residents has increased significantly. The length of life is subject to two constraints. On the one hand, the level of health care limits people's lifespan, so different societies and different periods have different life spans. On the other hand, due to differences such as living standards, the life span of each person is also very different. The fewer the population, the better the resources, at least for China it works like that.
In the 1980s, the main reason for the government to promote family planning became the improvement of education and economic development. The logic behind this is that if there are fewer children, parents will have more money for their children to study, and the school attendance rate will rise. However, if compulsory education is well implemented, or if the people are rich enough, the effect of controlling the population may not be as obvious.
Picture1-8: China -Tertiary school enrollment from 1998-2016
Data Source:World Bank https://www.theglobaleconomy.com/China/Tertiary_school_enrollment/
Rosenzweig of Yale University and Zhang Junsen of the Chinese University of Hong Kong in 2009 found that birth control did increase enrollment, but the effect was very limited, only 4%, and the score was about 1%.
In the world, the popularization of higher education has already become an international trend. According to the global education summary published by UNESCO, as early as 2007, more than 40 countries and regions in the world have entered the stage of the popularization of higher education. In some countries, the gross enrollment rate of higher education is more than 90%. In addition to developed countries, the Mongolian Republic，the gross enrollment rate of higher education is as high as 48%, and it is about to enter the stage of the popularization of higher education (UNESCO, 2009). In comparison, the gross enrollment rate of China's higher education in 2012 is only 30%, far behind the average level of major countries in the world. There is still much room for improvement in the scale of higher education in China.
If the scale of China's higher education is to be coordinated with the social economy, the average annual growth rate should be maintained at around 1.76%. At this rate, China will enter the popularization stage of higher education in 2027, with a student population of 39.20 million. According to the "Okun's law", for every 2% increase in GDP, the social unemployment rate can be reduced by 1%, which means that for every 1% increase in GDP, it can provide 6 million jobs for the society. Based on this calculation, in the next 18 years, China will have an average of 42 million new jobs each year. Since the 1990s, China has clearly defined the goal of "the national financial education expenditures account for 4% of the gross national product". So far, the proportion of investment in education has become larger and larger, so the level of education in China is closely related to economic development and family planning.
The development of higher education is showing a steady advancement, and the life expectancy of China's population is gradually increasing, which is closely related to family planning. It can be seen that family planning has indeed improved the quality of the population.
1.4.3 Optimizing the natural resources
China's total resources are among the highest in the world: the agricultural land area ranks first in the world, the land area and mineral resources rank third in the world, and the forest reserves and freshwater resources rank sixth in the world. However, the sum population of Russia, Oceania, the United States, Canada, and Mongolia are less than 10% of the world's population, but the land area is over 39% of the world. The total population of the United States, Canada, Russia, Oceania, and South America account for 13.7% of the world's population, but they have 36% of the world's cultivated land.
And also Russia, South Africa, Australia, Saudi Arabia, Canada, Germany, and the United Kingdom have 13% of the world's population, but they have 62.3% of the world's mineral resources. In addition to a few countries with abundant resources, China's per capita resources are not inferior. Because China's per capita resources are not up to the world average level, in order to increase per capita resources, it is necessary to reduce the population. Family planning is a mandatory policy for China, and it does help China to optimize the resource and increase per capita resources.
Nearly 25 years ago, in 1994, an American scholar named Lester Brown wrote an article "Who will feed China?" ", claiming that China will have a food shortage, which in turn will cause a worldwide food crisis. From 1994-1995, China has changed from a net food exporting country of 8 million tons to a net importer of 16 million tons.
According to a study released in 1995, the World Environment Institute of the Washington Institute of the Environment said that China has become a major importer of food overnight, and is pushing up world food prices.
“There is no precedent by which to assess the extraordinary growth in the demand for food that is occurring in China today,” says Brown. “Over the last four years, the economy has grown at double-digit rates--13 percent in 1992, 13 percent in 1993, 11 percent in 1994, and an estimated 10 percent in 1995.” During this period, the economy grew by 56%. Allowing the population to grow by 1.1% a year means that the income of 1.2 billion people has increased by half in four years! The study, funded by the Curtis and Edith Munson Foundation, shows that as incomes increase, Chinese are rapidly diversifying their staple foods, shift from heavily relying on starchy staple foods (such as rice) to staple foods containing more animal products. Pork consumption increased from 7 million tons in 1978 to 10 million tons in 1994, China became the world's leading consumer of red meat. The Seafood, alcohol drinking and eggs also face the same problem. The combination of soaring income and population growth is growing the demand for food on an unprecedented scale. If China continues to push the food chain up, it will increase its total food use from less than 300 kilograms per person to 400 kilograms in 2030, roughly half of the 800 kilograms consumed by the United States. By 2030, it will need to import about 369 million tons of food. Can China afford the cost of importing large quantities of food? The answer is yes. The more difficult question said by Brown was, who can provide such a big scale of food? The answer is no one. If China's population develop rapidly, its import demand will soon exceed the export capacity of the United States and other food-exporting countries.
Water may be scarcer than land. Since 1949, China’s demand for water has increased six times, the northern area of China has become a water-deficient area. Because water is a necessity of life as food. In recent years, the “water crisis” is one of the more frequently used words. When we opened newspapers and magazines, and a water crisis often occurs. China's total freshwater resources are 2,800 billion cubic meters,
resources are only 2,300 cubic meters, only one-fourth of the world's average level, and it is one of the countries with the world's poorest per capita water resources.”
Although China is rich in natural resources, due to its large population, it is also a resource-poor country in terms of per capita resource possession. Resolving the problem of per capita resource ownership is the family planning policy, which makes the population stable and low growth.
China's per capita energy consumption is gradually increasing. Due to the impact of family planning, China has reduced its population by 400 million, which is more conducive to optimizing resource allocation and raising the level of per capita resources.
It can alleviate the contradiction between people and land, increase the per capita possession of cultivated land, and the level of food per capita. At present, China's per capita resource possession has reached one-half of the world average level. Although it is less than the average, it has risen from one-fourth of the per capita possession to one- half. Since implement of family planning, under the condition that “per capita resources” was so low, China has achieved such a great improvement. Family planning does improve the per capita resource possession.
1.4.4 Promote economic development
1.4.4.1 Household savings
China is becoming one of the fastest growing wealth markets in the world. As of August 2013, China has become the country with the largest amount of savings in the world, and it is also the country with the largest per capita savings. At the same time, China is also the country with the highest global savings rate. The current household savings rate has exceeded 50%, far exceeding the world average.
Gan Li, director of the China Center for Family Finance Research and the president of the Institute of Economics and Management of Southwestern University of Finance and Economics, pointed out at the 2015 China Wealth Management Summit Forum that the savings rate of high-net-worth households in China is much higher than developed countries. Gan Li analyzed the living conditions of Chinese small and micro-family.
According to the collected statistical samples, the top 5% of households with net assets
were selected as high-net-worth families. The statistical results show that the total assets of domestic high-net-worth households are 7.169 million yuan( $106.8 million) and net assets are 6.89 million yuan( $102.7 million). The total assets of ordinary households are 406,000 yuan( $ 60535) and the net assets are 376,000 yuan( $ 56053). From the perspective of personal income and consumption, the top 5% of high-net-worth households have a per capita income of 328,000 yuan( $ 48897), a total consumption of 140,000 yuan( $ 20870), and a savings rate of 57.3%; the ordinary household's income per capita is 62,000 yuan( $ 9242), the total consumption is 46,000 yuan( $ 6857), and the savings rate is 25.8. %.
Why is China's savings rate so much higher than the other countries? One explanation is that China's economy is growing rapidly, and national income and government tax revenues are also increasing. Or because of the imperfections in medical insurance and social insurance systems, inflation and other factors make people save as much as possible. Other explanation, is the most important one, is to deal with risks in the future.
Due to the implementation of family planning, the difficulty of only one child to support their parents has increased. The family size of “4-2-1” has enabled more Chinese to choose to save money to protect their future.( “4-2-1” means four old people, one couple, one child).
China's high savings rate plays an important role in promoting economic growth.
Savings are the most important material resources and foundations in the process of capital formation and economic development. The level of the savings rate determines the speed of economic development. In addition, to achieve modernization, industrialization, and urbanization, an important factor is investment. In the end, it still comes from domestic savings. And it must be a higher saving rate to meet the needs of modernization. Therefore, the high savings rate around China is the necessary guarantee for maintaining high economic growth. It provides good conditions for speeding up modernization, industrialization, and urbanization, and plays a very important role in economic growth.
1.4.4.2 Demographic dividend
Bloom and Canning created the concept of “demographic dividend” in 2003, which has a very direct meaning: the proportion of the working-age population in the total population has risen.
Demographic dividend refers to a large proportion of the working-age population of a country or region to the total population, and the dependency ratio is relatively low, which creates favorable population conditions for economic development. The entire country or region has a high economic savings rate, high investment, and high growth rates. The resources are relatively rich, and the golden period is very favorable to economic development. It is widely believed that the period when the total dependency ratio is less than 50% is the demographic dividend period.
However, Cai Wei, director of the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences, recently said at the second China Economic 50- person Tiandao Forum（2006）that China will face a major turning point in the shortage of surplus labor, and it is urgent to turn economic growth into labor productivity. Cai Wei believes that as the birth rate declines, the number of working people in China may change from growth to stability in 2013, and then gradually decline. China’s ‘demographic dividend’, which has enjoyed more than 20 years, is about to dry up.
People have different economic behaviors at different ages, and changes in the age structure of the population can significantly affect the economic operation of a country or region. At the beginning, the release of the demographic dividend made China's economy develop rapidly. However, after the family planning, the age composition of the population changed. The number of young people who can be the main labor force decreased due to family planning. The former large-scale labor force gradually entered the aging group.
When the proportion of the population in the middle is large, there are several effects:
① Because the total output is greater than consumption, investment is more, capital accumulation is faster;
② The number of children is reduced, the labor participation rate, especially women's labor participation rate is higher;
③The labor investment in the labor force is more and the human capital stock is higher.
This is what China has experienced in the past 30 years. When the demographic dividend window is closed, the demographic dividend will turn into a population debt. It is more intuitive to use formulas to express:
趠 웠 趠 웠
趠 웠 趠 웠
趠 웠 趠 웠
趠 웠 representing the total output (Gross National Product) of the t period, 趠 웠representing the total labor force of the t period, and 趠 웠 is the total population, the meaning of the above formula is: the per capita GDP is equal to the proportion of the working-age population to the total population multiplied by labor productivity.
Deriving on both sides of the above formula, the following formula is obtained:
趠 웠 趠 웠 h 趠 웠 趠 웠
That is, the growth rate of per capita GDP is composed of two parts, one of which is the speed of progress in labor productivity ( 趠 웠) , The second is the growth rate of the working-age population minus the growth rate of the total population.
That is to say, even if the labor productivity growth is very slow, as long as the proportion of the working-age population is still rising, the per capita GDP will rise. On the contrary, when the demographic dividend window is closed and the occupational age population begins to decline, we must use higher labor productivity growth to maintain per capita GDP does not decline, and a country begins to repay population liabilities.
So is China’s demographic dividend ending? In fact, demographers have long discovered that according to the current fertility rate and demographics, China already finished the demographic dividend in 2012. Even if China’s demographic dividend is approximately exhaustion, we cannot deny the positive impact of the demographic dividend on the Chinese economy over the past 20 years.
2. Practical Part
2.1 Analyze the impact of economic factors related to family planning on the Chinese economy
2.1.1 Data source and sample selection
This article focuses on the impact of family planning on the Chinese economy. Family planning has been implemented for 30 years. Therefore, this thesis studies the influence of the Chinese economy by family planning. This thesis takes China's economic change (GDP) as an explained variable from 1998 to 2018. (Effective data that can be found at the National Bureau of Statistics of China in only from 1998 to 2018.)And choose the average family size, the education level, national saving rate, the consumer price index and the healthcare level be the explanatory variable. Finally, 126 annual data were obtained. All data are from the National Bureau of Statistics, the China Statistical Yearbook, and the State Council Census Bureau. Most of the pictures are from the Economy World Bank.The data processing software is SPSS.
2.1.2 Model settings and variable definitions
①Average Family Size: The average number of persons residing within a household in a particular area. It is computed by dividing the total population in households (excluding group quarters such as correctional facilities, nursing homes, and college dormitories) by the total number of occupied housing units in that area.
②Nation Savings: Total saving by all sectors of the economy: personal saving, business saving (corporate after-tax profits not paid as dividends), and government saving (budget surpluses). National saving represents all income not consumed, publicly or privately, during a given period. As measured by the Bureau of Economic Analysis, national saving does not include unrealized capital gains or losses ($).
③Consumer Price Index (CPI): An economic measure calculated as the average change in prices for a fixed group (basket) of products and services considered to be either essential or universally desirable for a given population or segment of the population.(last year = 100)
④ Education Level: The millions of people who have a bachelor degree ( includes obtain the undergraduate degrees in China and abroad ).
⑤Healthcare Level: Annual health expenditure per capita ($).
⑥Gross domestic product：GDP, is the total value of goods and services produced in a country. It is an indicator of total economic production ($).
This thesis uses the average family size to represent the number of family members in the decision-making process and analyzes the changes in family size and family structure. CPI, which is often an important reference indicator for market economic activities and government monetary policy. Education level and health level can be divided into HDI. These two indicators can measure China’s national welfare and human development, not just economic descriptions.The numerical simulation results show that in the long run, although the previous family planning in China can bring about a higher labor structure and urbanization level, it is not conducive to economic growth.
This article sets the main regression model as follows：
(1)
2.1.3 Practical results and analysis
2 . 1.3.1 Descriptive statistical analysis results
Variable Sample Size Minimum Maximum Average Std.Error
GDP 21 825.58 9409.57 4153.875 3059.463
Family Size 21 3.05 3.65 3.219 0.177
Savings 21 395.11 6013.47 2678.43 2048.21
CPI 21 98.6 105.9 101.881 2.001
Education 21 89.373 412.387 278.474 112.975
Healthcare 21 305.4 3921.3 1521.109 1205.863
Table 2-1. Describe statistical analysis results Source: Own calculations
From the minimum to the maximum of GDP, the gap is very large, almost from 1000 to 10,000. It can be seen that China's economic development has been so fast in the past 20 years. There have also been significant changes in the average size of the family. From 3.85 persons in 1998 to 3.05 in 2018. If we compared with the US, as of 2018, the U.S.
Census Bureau counted about 83.09 million families in the United States. The average family consists of 3.14 persons in 2018. China has achieved a lower family size than the United States, which is inseparable from the family planning policy. The level of the savings rate determines the speed of economic development. China’s national savings rate has nearly turned 15 times in 20 years. This also proves the rapid development of China's economy. China's household consumption index is relatively stable, and CPI is an important indicator for observing inflation. We can see that China is basically stable at 2% inflation. Education plays an important role in promoting the optimization of human capital for economic development. This role is the main factor for economic growth. It is a kind of capital with economic value. The growth of per capita medical expenses in China is significantly lower than the rate of economic growth. However, the per capita medical expenses have also increased by 13 times. This is due to the health
care system and the pension system. Descriptive statistics of the remaining variables and other related test values can be found in picture 2-1, and will not be repeated here.
2.1.3.2 Correlation analysis
Before the multivariate linear regression of the model, the Pearson correlation coefficient is used to analyze the correlation coefficient between the variables to ensure that there is no serious multi-collinearity problem in the multivariate regression. The results are shown in Table 2-1.
Pearson related coefficient
GDP($) Average Family Size Pearson Coefficient -0.761***
P-value 0.000
Gross Savings Pearson Coefficient 0.998***
P-value 0.000
CPI(last year =100 ) Pearson Coefficient 0.292
P-value 0.000
Education Level Pearson Coefficient 0.927***
P-value 0.000
Healthcare Level Pearson Coefficient 0.984***
P-value 0.000
Table 2-2. Pearson related coefficient
Note: ***, **, and * indicate significant at 1%, 5%, and 10%, respectively.
From the above table, we can use correlation analysis to study the correlation between GDP ($) and average family size, total savings, CPI (last year = 100), education level, and health care level, using Pearson correlation coefficient. A detailed analysis of the strengths and weaknesses of the correlation can be seen:
