Quantity-Quality: The Positive Effect of Family Size on School Enrollment in China (Incomplete)

Many policy makers in developing countries see restricting family size as a good strategy for increasing average human capital investment. This belief is consistent with the observed negative correlation between quantity and quality of children both across countries and across households within countries. However, because parents simultaneously choose the quantity and quality of their children, the observed correlation may reflect parental preferences rather than the causal relationship of quantity on quality. In addition, the decision to have a second child may be positively correlated with the quality of the first child. This paper exploits exogenous changes in family size caused by relaxations in China’s One Child Policy to estimate the effect of family size on school enrollment. Specifically, it uses the relaxation that allows a rural household to have a second child if the first is a girl. First, it shows that the "1-son-2-child" rule increased family size for first born girls. Second, it uses the exogenous increase in family size to find that an additional sibling significantly increases school enrollment of the first child. Furthermore, this paper shows that the One Child Policy dramatically increased sex-imbalance in certain areas. (JEL I2, I20, I21, J13, J16, J24, O10, R2 ) ∗I am grateful to my advisors Josh Angrist, Abhijit Banerjee and Esther Duflo for their guidance and support; Ashley Lester, Dwight Perkins and Mark Rosenzweig for in-depth discussions and useful suggestions; the participants at the MIT Development Lunch for comments; and Catherine Baird at the Carolina Data Center for invaluable data assistance. I would like to acknowledge the National Science Foundation Graduate Research Fellowship and the MIT Schultz Fund for financial assistance. All mistakes are my own. Please contact [email protected] with comments or suggestions.