Population ageing and inequality: Evidence from China

Population ageing has significant economic and social costs, and this paper studies its impacts on inequality, both theoretically and empirically. First, we build a two-period overlapping generation model with uncertain lifetime and find that population ageing has the overall effect of increasing income and consumption inequality within the society. For empirical analysis, we use household data from China Health and Nutrition Survey to assess the age effect on income and consumption inequality in China, and confirm the results predicted by the theoretical model.