One-Child Policy, Marriage Distortion, and Welfare Loss

60 Pages Posted: 29 Nov 2015

See all articles by Wei Huang

Wei Huang

Harvard University - Department of Economics; NBER; IZA Institute of Labor Economics

Yi Zhou

University of California, Berkeley - Department of Demography

Abstract

Using plausibly exogenous variations in the ethnicity-specific assigned birth quotas and different fertility penalties across Chinese provinces over time, we provide new evidence for the transferable utility model by showing how China's One-Child Policy induced a significantly higher unmarried rate among the population and more interethnic marriages in China. We further develop the model and find that a policy-induced welfare loss originates from not only restricted fertility but also from marriage distortion, and both depend solely on the corresponding reduced-form elasticities. Our calculations suggest that the total welfare loss is around 4.9 percent of yearly household income, with marriage distortion contributing 17 percent of this welfare loss. These findings highlight the importance of taking into consideration the unintended behavioral responses to public policies and the corresponding social consequences.

Keywords: One-Child Policy, marriage distortion, welfare loss

JEL Classification: H20, I31, J12, J13, J18

Suggested Citation

Huang, Wei and Zhou, Yi, One-Child Policy, Marriage Distortion, and Welfare Loss. IZA Discussion Paper No. 9532, Available at SSRN: https://ssrn.com/abstract=2696370

Wei Huang (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Yi Zhou

University of California, Berkeley - Department of Demography ( email )

2232 Piedmont Avenue
Berkeley, CA 94720-2120
United States

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