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The One-Child Policy and Household Saving

Author

Listed:
  • Taha Choukhmane

    (MIT Sloan - Sloan School of Management - MIT - Massachusetts Institute of Technology, NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research)

  • Nicolas Coeurdacier

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research)

  • Keyu Jin

    (LSE - London School of Economics and Political Science)

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," Post-Print hal-03915301, HAL.
    • Handle: RePEc:hal:journl:hal-03915301
    DOI: 10.1093/jeea/jvad001
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03915301v1
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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D10 - Microeconomics - - Household Behavior - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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