Tobacco Control, Human Capital, and High-Quality Development: Implications for China and Other Countries in Demographic Transition [Working Paper Series]

This Working Paper was written by Mark Goodchild, Rong Zheng, Zhihui Li, Jidong Huang, Lin Xiao, and Minghui Ren. The working paper examines the potential links between tobacco control and long-term economic development in countries going through demographic transition, like China. The authors use existing literature to develop a conceptual framework considering the pathways through which tobacco control, and particularly tobacco taxation, may influence human capital, labor supply, physical capital accumulation, fiscal sustainability, and total factor productivity. The findings suggest that tobacco control supports economic development through different mechanisms including healthier aging, longer working lives, improved labor participation and productivity, enhanced human capital formation, improved reproductive health, and stronger household savings and investment. Tobacco taxation also has additional macroeconomic benefits, as it generates sustainable government revenue and supports productive public investment. These gains from tobacco control are especially important in China and other countries facing challenges related to demographic aging. The working paper concludes by highlighting the valuable role that tobacco control can play in promoting long-term economic development.