Age of Retirement and Human Capital in China, 2015-2050 Age of Retirement and Human Capital in China, 2015-2050

As China's aging population continues to increase rapidly, whether the country should adjust the official retirement age, and if so, how, is currently a major debate of public policy. This study examines the impacts of different scenarios of postponing the retirement age on the human capital of China in the next four decades. Based on extensive policy review for various proposals of retirement age adjustment, the size and quality of the Chinese working-age population from 2015 to 2050 are projected under nine different policy schemes. The ProFamy Extended Cohort-component Method is used for the projections with the most recent 2010 census data of China as the baseline. More importantly, we incorporate two aspects of human capital of the population - health and education - in the projection to take account of the quality of the work force. Through the projection, we show and compare various scenarios for changes in the size and quality of the Chinese labor force. We highlight the changes in the “productive labor force”, working-age population with good health and education. Results suggest that substantial benefits can be gained not only be in the size, but also in the quality, of the labor force if China starts to postpone the retirement age gradually in the near future. The gain will be particularly notable after 2050 due to Chinese government’s surged investment in human capital in the last few decades, particularly for Chinese females. Based on these projections, we discuss alternative policy options to adjust the retirement age in China and their implications for the Chinese human capital and economic development in the long run.