Pricing Children, Curbing Daughters: Fertility and the Sex Ratio During China’s One-Child Policy

Abstract

I characterize China’s One-Child Policy as an individually tailored pricing system allowing women to have second and third children. The average policy price for having a second or third child is 13,900 dollars (2020, purchasing-power parity). It varies by age and other individual characteristics. I estimate policy elasticities exploiting within-individual price variation in a sample of women that annually replicates the national total fertility rate between 1979 and 2000. A 1% increase in the policy price decreases the probability of having a child by 0.7% (s.e. 0.1%). Without the policy, the total fertility rate would have been 2.7 children. The policy lowered this rate by 0.3 (s.e. 0.04) by curbing the number of girls born. This gendered policy impact further distorted the sex ratio at birth. Without the policy, the excess of boys per 100 girls born would have been 4.3. The policy increased the excess by 1.1 (s.e. 0.4).