This paper focuses on two major elements of China's population dynamics—the rising proportion
of workers in the population and the shift of rural workers from agriculture into industry and
services—in a provincial-level analysis of per capita income and productivity growth during the
last three decades. We measure the ‘mechanical’ contributions of these dynamics to per capita
income as revealed by growth decompositions, before assessing the determinants of per capita
income and productivity growth in a series of regressions that include the growth of the
working-age to total population (WAP) ratio and a measure of sectoral employment change.
Our results indicate that sectoral change has made a significant positive contribution to both
per capita income growth and aggregate productivity growth, stemming from its positive impact
on agricultural productivity growth—as predicted by the Lewisian dual economy model. However,
the negative impact of sectoral change on productivity growth in the industrial and service
sectors, combined with the negative impact of growth of the WAP ratio on both per capita income
and aggregate productivity growth, suggests that the benefits of China's population dynamics
during the last three decades have been overstated.