China & World Economy / 112–130, Vol. 25, No. 3, 2017

How Does Trade Openness Affect Regional Demographic Transitions?
Evidence from China’s Provincial Panel Data

Shujin Zhu, Renyu Li, Tenglong Zhong*

Abstract

This paper investigates the effect of trade openness and other variables on the demographic transition in China using the instrumental variables regression method based on provincial panel data for the period between 1981 and 2013. The results indicate that trade openness is one of the determinants of China’s demographic transition and has two distinct effects: (i) an income effect that accelerated the demographic transition by increasing per capita income; and (ii) a human capital effect that suppressed the demographic transition by reducing human capital accumulation. The effects of trade on demographic transition vary across different regions. This study identifies the important determinants of demographic transition in China’s regions, and has rich policy implications for demographic transition and the upgrading of trade structure.