Family planning, fertility and TFP: the “fertility-productivity paradox” from an economic growth perspective

Zhi Li and Ce Liang

Applied Economics, 2025, vol. 57, issue 20, 2634-2648

Abstract: This article employs the difference-in-differences method to analyse the endogenous responses of Chinese families and firms to fertility policy adjustments from an economic growth perspective. The economic growth effects of relaxing birth restrictions are multifaceted and paradoxical: (1) The adjustment of China’s family planning policy leads to gender discrimination and total factor productivity (TFP) loss while promoting fertility. (2) The adjustment of family planning policies has led to a ‘fertility-productivity paradox’. Its impact on economic growth depends on whether the increase in labour supply and the reduction in TFP loss can be achieved. Offsetting the costs of fertility for families and female employment for firms is crucial. (3) The adjustment of family planning policy mainly affects the fertility rate of households and the TFP of enterprises by affecting the supply and demand of labour factors. (4) Due to the differences between the sensitivity of households to fertility cost and the sensitivity of enterprises to employment cost, the impact of the adjustment of family planning policy on family fertility rate is heterogeneous in terms of assets, age, and intergenerational care, and the impact on the TFP of enterprises is heterogeneous in terms of ownership, factor structure and industry competitiveness.

Date: 2025
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DOI: 10.1080/00036846.2025.2470442

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