Academic journal article Economic Inquiry

Can Government Enforcement Permanently Alter Fertility? the Case of China

Academic journal article Economic Inquiry

Can Government Enforcement Permanently Alter Fertility? the Case of China

Article excerpt

I. INTRODUCTION

In developing countries, per capita output growth objectives are often stymied by high birth rates.(1) Traditional values, ignorance of birth control technology and labor-intensive farming are all factors which contribute to high fertility rates. For those reasons, many developing countries experiencing high birth rates adopt population control policies. While most programs combine educational efforts with some form of persuasion, many also provide strong economic disincentives to high fertility.(2)

Of particular interest, from this vantage point, is the experience of the People's Republic of China which stands alone in its use of quotas on child-bearing decisions.(3) China's population-control policy began with a massive campaign in 1953, reversing an earlier pro-natalist stance. However, that campaign was curtailed by the political turmoil arising from the Great Leap Forward and the Cultural Revolution. Population control programs resumed in 1970 with the issuance and enforcement of three reproductive norms: late marriage, longer spacing between births and fewer children. In 1979 the authorities went even further, allowing each household to have only one child.

Interest in China's experience arises not only from the severity of the restrictions, but also due to the government's ability to enforce them. The feasibility of enforcing these restrictions is a result of the deep penetration of the communist party into most aspects of an individual's life, including its control over housing, employment and salaries.(4) However, despite the government's extensive involvement in birth planning, those who study Chinese demography have debated the extent to which government policies are responsible for the large fertility decline in the 1970s.(5)

This paper uses recent advances in economic theory and econometrics to quantitatively assess the main sources of fertility fluctuations in China. Specifically, we employ a model with endogenous fertility choice which modifies the framework of Razin and Ben-Zion [1975] and Barro and Becker [1989].(6) In contrast to other papers, we focus on the relationship between government enforcement of population control policies and fertility outcomes. We also allow the fertility rate to be affected by (1) household preferences, including alterations in taste as well as in education, health care and the changing role of women, and (2) production technology, which mostly captures changes in agricultural output or income. We perform simple comparative-static analysis to examine long cycles in fertility and output and characterize the transitional dynamics which govern short cycles. Easterlin [1968] and Lee and Loschky [1987] provide nice discussions of long fertility cycles. The long-run (steady-state) predictions will be used to identify the empirical structural vector autoregression (VAR) system as well as interpret the underlying structural disturbances. Additionally, the transitional dynamics results can be compared to the estimated dynamic structure.

Finally, we employ a structural VAR, as in Blanchard and Quah [1989] and Ahmed, Ickes, Wang and Yoo [1993], to econometrically disentangle the relative contributions of policy and economic development factors to changes in fertility growth. The structural disturbances include a change in the government's enforcement power, a technological advance in agricultural production and a preference shift toward a higher fertility rate, all of which are capable of generating both short and long cycles in fertility and output. We find that government enforcement power has a significant negative effect on fertility, accounting for about one-third of the variance of the forecast error for fertility growth after the first year. An expansion in (agricultural) output, on the other hand, yields a short-run positive impact on fertility growth and is responsible for almost one-fifth of fertility growth variations. Furthermore, while theoretically all shocks have the potential to generate long cycles, only preference shifts have statistically significant long-run effects. …

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