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FERTILITY, HUMAN CAPITAL, AND INCOME: THE EFFECTS OF CHINA’S ONE-CHILD POLICY

Published online by Cambridge University Press:  18 January 2021

Jiajia Gu
Jiajia Gu*
Affiliation:
Jinan University
*
Address correspondence to: Jiajia Gu, 113A Zhonghui Building, Jinan University, 601 Huangpu West Avenue, Guangzhou510630, China. e-mail: [email protected].
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Abstract

This paper studies the effects of China’s one-child policy on human capital and income. I build and calibrate a quantitative OLG model with intergenerational transfers. The model generates a quantity–quality trade-off, so a restriction on fertility leads to an increase in human capital, and higher human capital then contributes to higher individual income and welfare. Calibrating the model to match survey data on urban households, I find that the one-child policy increases the human capital of affected agents by about 47% relative to a counterfactual with no fertility restrictions. However, the effect on aggregate income is negative as the size of the labor force falls.

Keywords

One-Child PolicyFertilityHuman Capital
Type
Articles
Information
Macroeconomic Dynamics , Volume 26 , Issue 4 , June 2022 , pp. 979 - 1020
Copyright
© 2021 Cambridge University Press

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Footnotes

I am grateful to Keyu Jin and Rachel Ngai for their valuable advice and constant encouragement. I thank the two anonymous referees whose comments have greatly improved this paper. I thank Thomas Carr for editing this paper. All errors are mine.

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