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The One-Child Policy and Household Saving

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  • Taha Choukhmane
  • Nicolas Coeurdacier
  • Keyu Jin

Abstract

We investigate whether the “one-child policy” has contributed to the rise in China’s household saving rate and human capital in recent decades. In a life-cycle model with intergenerational transfers and human capital accumulation, fertility restrictions lower expected old-age support coming from children—inducing parents to raise saving and education investment in their offspring. Quantitatively, the policy can account for at least 30% of the rise in aggregate saving. Using the birth of twins under the policy as an empirical out-of-sample check to the theory, we find that quantitative estimates on saving and education decisions line up well with micro-data.

Suggested Citation

  • Taha Choukhmane & Nicolas Coeurdacier & Keyu Jin, 2023. "The One-Child Policy and Household Saving," Journal of the European Economic Association, European Economic Association, vol. 21(3), pages 987-1032.
    • Handle: RePEc:oup:jeurec:v:21:y:2023:i:3:p:987-1032.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvad001
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    Cited by:

    1. Bloom, David E. & Kuhn, Michael & Prettner, Klaus, 2023. "Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences," IZA Discussion Papers 16500, Institute of Labor Economics (IZA).

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