Population aging and firm productivity: evidence from China

Using Chinese A-share listed firms from 2007–2019, this paper examines the effect of population aging on firm productivity. Using the proportion of the elderly population aged 65 and above in the province where the firm is located as the measure of population aging, we find that firm productivity is negatively associated with population aging. Moreover, the impact of aging on productivity is more pronounced in labor-intensive firms. We further find that employee training, employee welfare, and embracing automation can alleviate the negative impact of population aging on firm productivity. Our results are robust to controlling for the potential endogeneity problem and using alternative measures of population aging and firm productivity. This paper contributes to the literature by examining the effects of population aging and by proposing corporate strategies to mitigate its adverse consequences.