Ageing, Labour Force Participation and Education: Comparing the Implications for Economic Growth in China and India

An ageing population will result, over the next forty years, in a fall in China's labour force as the more youthful Indian labour force continues to grow. However, we find that growth in output per capita has been dominated, in both countries, by growth in labour productivity. China's stronger labour productivity performance has resulted, until recently, from a stronger growth in their capital/labour ratio. Now, however, it is the growth of China's total factor productivity, driven by a much stronger public investment in education, that keeps them ahead. To match China, India must increase participation in education and in the workforce, especially amongst women.