The One-Child Policy and Household Savings

Taha Choukhmane, Nicolas Coeurdacier and Keyu Jin
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Taha Choukhmane: Yale University [New Haven]
Keyu Jin: LSE - London School of Economics and Political Science

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Abstract: We investigate how the `one-child policy' has impacted China's household saving rate and human capital in the last three decades. In a life cycle model with endogenous fertility, intergenerational transfers and human capital accumulation, we show how fertility restrictions provide incentives for households to increase their offspring's education and to accumulate financial wealth in expectation of lower support from their children. Our quantitative OLG model calibrated to household level data shows that the policy significantly increased the human capital of the only child generation and can account for a third to 60% of the rise in aggregate savings. Equally important, it can capture much of the distinct shift in the level and shape of the age-saving profile observed from micro-level data estimates. Using the birth of twins (born under the one child policy) as an exogenous deviation from the policy, we provide an empirical out-of-sample check to our quantitative results; estimates on savings and education decisions are decidedly close between model and data.

Keywords: Life Cycle Savings; Fertility; Human Capital (search for similar items in EconPapers)
Date: 2014-09-01
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03460407v1
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: The One-Child Policy and Household Saving (2023)
Working Paper: The one-child policy and household saving (2023)
Working Paper: The One-Child Policy and Household Saving (2023)
Working Paper: The One-Child Policy and Household Saving (2023)
Working Paper: The One-Child Policy and Household Savings (2014)
Working Paper: The One-Child Policy and Household Savings (2013)
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