China’s growth slowdown: Labor supply, productivity, or what?

Anping Chen, Nicolaas Groenewold

Research output: Contribution to journalArticle

Abstract

There has been much discussion of the sources of China’s growth slowdown but little formal econometric analysis of this question. Chen and Groenewold (2019) show that the slowdown was primarily supply-driven, but they stopped short of identifying specific supply variables. This paper extends their analysis and distinguishes several potential supply components: labor supply, productivity, and capital accumulation. Our results confirm their main conclusion that supply dominates the explanation of the slowdown. A model with two supply factors (labor supply and productivity) reveals that both components contribute to the slowdown, although productivity makes the greater contribution. However, when capital stock is added to the model, the decline in the capital accumulation rate becomes an important factor in the growth slowdown, to some extent replacing the effects of both labor supply and productivity.

Original languageEnglish
Pages (from-to)35-66
Number of pages32
JournalFrontiers of Economics in China
Volume16
Issue number1
DOIs
Publication statusPublished - Mar 2021

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