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Testing the External Effect of Household Behavior: The Case of the Demand for Children

  • Hongbin Li
  • Junsen Zhang

This paper tests the external effect of household childbearing behavior by drawing on microfertility data from China. The test is executed by regressing one woman’s fertility on the average fertility of neighboring women. China’s unique affirmative birth control policy provides us with quasi-experimental fertility variation that facilities identification. We present two identification methods: (1) Testing the external effect from the dominant Han Chinese on minority women by using the fertility fine as an instrumental variable; and (2) identifying the external effect using an instrumental variable that is based on the difference-in-differences. We find that fertility has a large external effect.

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File URL: http://jhr.uwpress.org/cgi/reprint/44/4/890
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Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 44 (2009)
Issue (Month): 4 ()
Pages:

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Handle: RePEc:uwp:jhriss:v:44:y:2009:i4:p890-915
Contact details of provider: Web page: http://jhr.uwpress.org/

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  1. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
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