The One-Child Policy Amplifies Economic Inequality Across Generations in China

82 Pages Posted: 24 Aug 2020

See all articles by Yewen Yu

Yewen Yu

Peking University - Guanghua School of Management

Yi Fan

National University of Singapore (NUS) - Department of Real Estate

Junjian Yi

University of Chicago

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Abstract

This study finds that China's one-child policy (OCP), one of the most extreme forms of birth control in recorded history, has amplified economic inequality across generations in China since its introduction in 1979. Poor Chinese families, whose fertility choices are less constrained by the OCP than rich ones, have more children but invest less in human capital per child. Since human capital is a major determinant of earnings, the income inequality persists and enlarges across generations as a consequence. Based on nationally representative longitudinal household survey data, our estimation results show that the OCP accounts for 32.7%-47.3% of the decline in intergenerational income mobility. The OCP has significant ramifications for Chinese society, not only intragenerationally but also intergenerationally.

Keywords: One-Child Policy, differential fertility, child quantity-quality tradeoff, intergenerational mobility

JEL Classification: E24, J13

Suggested Citation

Yu, Yewen and Fan, Yi and Yi, Junjian, The One-Child Policy Amplifies Economic Inequality Across Generations in China. IZA Discussion Paper No. 13617, Available at SSRN: https://ssrn.com/abstract=3679023

Yewen Yu (Contact Author)

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

Yi Fan

National University of Singapore (NUS) - Department of Real Estate ( email )

United States

Junjian Yi

University of Chicago ( email )

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