The Unassuming Economist

From a paper by Lei Yu, Wenxian Zhou, Yujie Lin, Xinlong Yang and Jue Wang:

“This paper explores the impact of demographic changes on the sustainability of household liabilities, which is crucial for adjusting the effects of demographic shifts and stabilizing household debt levels. Using inter-provincial panel data and econometric models, including fixed effects, systematic GMM, and mediation effect models, the study examines how demographic structure affects household debt sustainability. It finds that the natural population structure has a more significant impact than social or spatial factors. Key results include: (1) higher child and old-age dependency ratios worsen debt sustainability, with regional variations; (2) a favorable gender ratio improves debt sustainability, particularly in the eastern regions; (3) higher income ratios for home-purchase and consumption expenditures, along with GDP growth, benefit debt sustainability, while financial security income has a negative effect; (4) rising house prices mediate the relationship between demographic changes and debt sustainability. The study recommends policy improvements such as incentives for multiple births and enhanced social security.”