The Demographic Transition and Rural Industrialization in China

The potential effect of a demographic transition on industrialization is of interest to scholars in both demography and economics. This study contributes to the literature by providing empirical evidence that a demographic transition creates population pressure that can facilitate rural industrialization. By studying China’s rapid demographic transition in the late twentieth century before massive internal labor migration took off and linking it to large regional variations in the process of rural industrialization in the wake of the country’s market-oriented reforms, we find that initial local population pressure is positively associated with subsequent rural industrial development, proxied by the extensive growth in local privately and collectively owned enterprises. Population pressure was more significantly associated with rural industrialization than other demographic factors considered, such as birthrate, dependency ratio, and sex ratio at younger ages.