Dependency ratio and emission trading scheme: a case study in China

Although dependency ratio (DR) significantly affects anthropogenic emissions and thus emission abatement, previous researchers usually neglected DR’s impact on climate policy implementation. In this paper, we attempt to narrow the research gap by studying how the DR is related to the emission trading scheme (ETS) in China. To achieve this research target, a Computable General Equilibrium (CGE) model is employed to study the relation between DR and ETS. The CGE model results show that both DR and ETS negatively affect carbon emissions because they decrease labor employment and thus economic output. The DR is negatively related to emission abatement and the economic cost of the ETS, whereas the ETS relieves the negative DR impacts on the economy and emissions. These findings imply that characterized by rising DR, population aging helps achieve emission mitigation; as climate policy relieves the negative impacts of the rising DR on the economy and emissions, its implementation may be smoother in an aging society.