How Population Aging Affects Industrial Structure Upgrading: Evidence from China

The question of how to proactively respond to population aging has become a major global issue. As a country with the largest elderly population in the world, China suffers a stronger shock from population aging, which makes it more urgent to transform its industrial and economic development model. Concretely, in the context of the new macroeconomic environment that has undergone profound changes, the shock of population aging makes the traditional industrial structure upgrading model (driven by large-scale factor inputs, imitation innovation and low-cost technological progress, and strong external demand) more unsustainable, and China has an urgent need to transform it to a more sustainable one. Only with an in-depth analysis of the influence mechanism of population aging on the upgrading of industrial structure can we better promote industrial structure upgrading under the impact of population aging. Therefore, six MSVAR models were constructed from each environmental perspective based on data from 1987 to 2021. The probabilities of regime transition figures show that the influencing mechanisms have a clear two-regime feature from any view; specifically, the omnidirectional environmental transition occurs in 2019. A further impulse–response analysis shows that, comparatively speaking, under the new environment regime the acceleration of population aging (1) aggravates the labor shortage, thus narrowing the industrial structure upgrading ranges; (2) has a negative, rather than positive, impact on the capital stock, but leads to a cumulative increase in industrial structure upgrading; (3) forces weaker technological progress, but further leads to a stronger impact on the industrial structure upgrading; (4) forces greater consumption upgrading, which further weakens industrial structure upgrading; (5) narrows rather than expands the upgrading of investment and industrial structures; and (6) narrows the upgrading of export and industrial structures. Therefore, we should collaboratively promote industrial structure upgrading from the supply side relying heavily on independent innovation and talent, and the demand side relying heavily on the upgrading of domestic consumption and exports.