This paper examines the empirical validity of demographic transition and studies its effect on consumption and saving rate in China. The decline of dependency ratio has created a productive population age structure with an affluent supply of labor force. Empirical results illustrate that the Chinese demographic transition leads to the increase of saving rate and the decrease of mean consumption. With the population aging deepens, the heavy burden of social old-age problem is gradually apparent. Most elderly people hope to depend on their children when they lose ability to live independently in China.
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