# Population aging, technological innovation and industrial differentiation

## TL;DR

This study explores how population aging and technological innovation affect industrial differentiation in China using data from 31 provinces between 2006 and 2022.

## Contribution

The paper introduces a novel analysis of how technological innovation moderates the impact of aging on industrial differentiation.

## Key findings

- Population aging significantly increases overall industrial differentiation in China.
- Technological innovation positively moderates the relationship between aging and industrial differentiation.
- Aging has a negative effect on the primary industry but a positive effect on the tertiary industry.

## Abstract

As China’s aging population deepens and its pace accelerates, it is particularly crucial to rely on technological innovation to drive industrial differentiation. Is there a connection between population aging, technological innovation, and industrial differentiation? Does technological innovation have a moderating effect? Based on the panel data of 31 provinces in China from 2006 to 2022, this paper constructs the entropy index to measure the overall industrial differentiation and tertiary industrial differentiation in China, and subsequently investigates the relationship among the three using the two-way fixed effect model. The results indicate that population aging has a significant positive impact on the overall industrial differentiation in China, with a regression coefficient of 1.1025. Technological innovation plays a positive moderating role, with an interaction coefficient of 0.3489. The effects of population aging on the differentiation of the three industries differ: the regression coefficient for the primary industry is −0.6437, which is significantly negative; for the secondary industry, the regression coefficient is 0.9252, which is statistically insignificant; and for the tertiary industry, the regression coefficient is 0.1539, which is significantly positive. The government should encourage enterprises to invest in technology research and development through tax cuts and subsidies, and enterprises should absorb high-quality talents, carry out intelligent transformation of traditional industries of enterprises, and improve their competitiveness.