Functionary Mechanism between Demographic Structure and Economic Growth in China Based on Cointegrating Methods

This study¡¯s objective was to solve the problem of functionary mechanism between demographic structure transition and economic growth in China using cointegration and vector error correction model. The results are: (1) A long-term co-integration relationship exists among birth rate, infant mortality, real GDP per capita and average wage of workers; (2) According to VECM, the adjustment of the economic system is 0.024 when the fluctuation of birth rate deviates from the equilibrium state; (3) Demographic variables are endogenous in the economic system. The conclusions are: (1) In China high-speed economic growth as well as low stable birth rate should be kept and domestic wealth should be accumulated via escalating the average wage; (2) To reduce the impact of the aging population on economic growth in China, high-qualified people¡¯s demand for birth should be stimulated to accelerate the transition of industrial structure from labor-intensive to knowledge-intensive.