How does demographic structure affect environmental quality? Empirical evidence from China

China is currently at a crossroads with an aging population and steadily decreasing economic growth rates. In this context, China's demographic policy may impact environmental quality through changes in energy usage and the demographic influences on economic development. Using panel data from 29 Chinese provinces for the period between 1995 and 2012, this study explores the relationship between the demographic structure and environmental quality in China. To accurately examine this relationship, the total effect is further divided into direct effect and indirect effect, which functions in an indirect way through the influences of demographic changes on economic growth. A comprehensive framework composed of a carefully designed two-stage regression model is employed to estimate both the direct and indirect effects of demographic changes on CO2 emissions. The generalized method of moments (GMM) method is used to control for potential endogeneity and introduce dynamics. The empirical results indicate that the direct effect of the share of the working-age population on CO2 emissions is positive, while the indirect effect depends on the specific level of GDP per capita because there is evidence of an inverted U-shaped relationship between CO2 emissions and GDP per capita. At the current stage of economic development, the total effect is positively associated with the share of the working-age population. Therefore, an aging society, although detrimental to economic development over the long term, might objectively alleviate China's environmental pressures to some extent.