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Taha Choukhmane, Nicolas Coeurdacier, Keyu Jin, The One-Child Policy and Household Saving, Journal of the European Economic Association, Volume 21, Issue 3, June 2023, Pages 987–1032, https://doi.org/10.1093/jeea/jvad001
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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.