Munich Personal RePEc Archive

Why has the birth rate relatively increased in China's wealthy cities?

Chen, Nana and Xu, Hangtian (2021): Why has the birth rate relatively increased in China's wealthy cities?

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Abstract

China’s wealthy cities tended to have low birth rates in past decades, but this relationship has disappeared in conjunction with the substantial relaxation of the one-child policy after 2011. This study develops a conceptual framework for the relationship between average household wealth and compliance with the one-child policy across cities and concludes that the compliance rate was greater in wealthier cities when above-quota births were fined according to household wealth and with limited liability. The relaxation of this policy has eliminated this inequality, leading to an increase in wealthy cities’ birth rates relative to those of other cities. A causal analysis exploiting variations in city-level birth rates and fertility policy compliance rates from 2008 to 2019 supports our hypotheses. Moreover, our results suggest that the fertility relaxation has resulted in a greater proportion of newborns in wealthy cities, which is expected to increase the next generation’s human capital.

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