Location or Hukou: What Most Limits Fertility of Urban Women in China?

China's fertility rate is below replacement level. The government is attempting to increase this rate by relaxing the one-child policy. China faces a possible tradeoff because further urbanization is needed to raise incomes but may reduce future fertility. We decompose China's rural-urban fertility gaps using both de facto and de jure criteria for defining the urban population. The fertility-depressing effects of holding urban hukou are more than three times larger than effects of urban residence. Less of the rural-urban fertility gap by hukou status is due to differences in characteristics than is the case for the fertility gap by place of residence.