The Impact of Young Cohort Size on Adult Educational Upgrading: Evidence from Family Planning Policies in China

This paper investigates the effect of the reduction in the young cohort size caused by Chinese family planning policies on the educational upgrading among older cohorts born before the policies. I suggest that family planning polices reduce the size of the young cohorts and increase their educational levels. Through imperfect substitutability of workers with same education but different ages, the incentives for older adults to acquire more education increase. Empirically, I examine the changes in the size of the young cohorts aged 16-24 caused by the family planning policies initiated in 1964 with both geographical and temporal variation. I find heterogeneous effects on the educational upgrading of older cohorts. A one percent decrease in the young cohort size increases the number of college graduates aged 25-49 by 0-2 percent during 1982-1990 and by 0-1 percent during 1990-2000, with bigger effects for the age group below 40. I find the effect of young cohort size on adult non-college graduates is negative but weaker than that for adult college graduates for all age groups. I further show that the observed increase in adult college graduates is more driven by the migration of college graduates for those aged 25-29, but the increase for those aged 30-49 is mostly driven by upgrading from non-college graduates who have already been in the local labor markets.