The One Child Policy and Family Formation in Urban China The One Child Policy and Family Formation in Urban China

The Chinese government implemented the One Child Policy in an attempt to stave off population explosion and its potential negative economic consequences on their infant economy in 1979. This article examines the consequences of this policy on marital matching and family size decisions. Using a simple General Equilibrium model, we show how by constraining marital output on the quantity of children dimension raises the marginal benefits for increased positive assortative matching, and greater investment in children. These theoretical predictions were next verified empirically, by first verifying the prediction on positive assortative matching using Distributional Overlap Test, which involves the comparisons of the joint density of spousal educational attainment, and provides support for the hypothesis of increased positive assortative matching among the urban population. To support this positive finding, we next examined if the policy was indeed binding. Using Poisson regression, we found suggestive evidence that the One Child Policy principally affected the quantity of children decision by suppressing parental gender preference of their child. This suggest that births beyond the first child are purely accidental among younger mothers, particularly those who were younger than 25 years of age when One Child Policy was legislated, since marital match, and family size decisions would not have been completed by then. This was affirmed using a pure Poisson model. In addition, we also found some evidence of increased educational attainment among children, further verifying the hypothesis that the One Child Policy altered familial decisions in urban China.