One-Child Policy, Differential Fertility, and Intergenerational Transmission of Inequality in China

Abstract

Using nationally representative longitudinal household survey data, this study finds that China’s one-child policy (OCP), one of the most extreme forms of birth control in recorded history, has amplified the intergenerational transmission of inequality in the country. Rural/poor Chinese families, whose fertility choices are less constrained by the OCP than those of urban/rich ones, have more children but invest less in their human capital. Since education is a major determinant of earnings, income inequality persists and increases across generations. Our results also show that the OCP accounts for 35.4%–51.5% of the decline in intergenerational income mobility in recent decades.

Keywords: One-child policy; Intergenerational transmission of inequality; Child quantity–quality trade-off; Differential fertility

JEL Classification: J13, J62