Threat or opportunity? Unveiling the impact of population aging on corporate labor investment efficiency☆

This study examines the impact of population aging on labor investment efficiency in Chinese listed firms from 2009 to 2020. Our main findings reveal that aging can positively influence labor investment efficiency, particularly in firms with labor redundancies such as state-owned enterprises, those with labor unions, high labor costs, and financial constraints. The positive effect is lessened in regions with abundant human capital, within the manufacturing sector, and laborintensive industries. The results show that improvements in labor efficiency are distinct from changes in capital investment efficiency, indicating no general rebalancing of resources due to demographic shifts. Firms with limited investment opportunities and under strict external monitoring benefit more from an aging workforce. Overall, our findings suggest that an aging population can offer opportunities for firms to enhance labor investment efficiency, challenging the conventional view of population aging as solely a threat.