China's One-Child Policy: Social and Economic Impacts

Overview and Policy Background

Economic reform has brought many changes to China's rural economy over the past two decades, reflected in a combination of rapid economic growth, rural industrialization, structural change, and sharp reductions in fertility. This paper evaluates the possible consequences of these changes on women's labor force participation.

The first area of inquiry explores the impact of China's one-child policy on female work patterns through its possible effects on fertility. Early studies that treated fertility behavior as exogenous to female labor supply tended to find that fertility has a negative impact on female labor supply. This approach ignores a potential selection problem inherent in estimating the fertility–female labor supply relationship, namely, that women who prefer to work may also desire fewer children. The instrumental variable method—identifying variables that correlate with fertility but have no direct impact on labor supply—can be used to resolve this problem.

In China, the policy is formally called the "planned birth policy," but in Western countries it is commonly referred to as the one-child policy. The term "one-child policy" is somewhat misleading, because it implies that all couples in mainland China are required to have only one child. In practice, the policy is promoted as an ideal, and its enforcement has been strongest in urban areas, with implementation varying considerably by location.

In most rural areas, families are permitted to have two children if the first child is female or disabled. According to Scharping (2003, pp. 67–88), provincial-level fertility policy for the majority of the Chinese population with rural or agricultural household registration can be grouped into three categories:

1) One-child policy: In six provinces—Beijing, Tianjin, Shanghai, Chongqing, Jiangsu, and Sichuan—almost all residents are expected to follow the one-child-per-couple policy. 2) 1.5-children policy: In 19 provinces, rural residents are permitted to have a second child after a specified birth interval if the first child is a girl. 3) Two-children policy: In five provinces—Hainan, Ningxia, Qinghai, Yunnan, and Xinjiang—all rural couples are permitted to have two children.

Additionally, married couples who themselves come from one-child families are permitted to have more than one child, and there are wide arrays of special exemptions for couples who do not come from one-child families.

State Power and Enforcement

In areas with stricter enforcement, having additional children may result in financial penalties. These penalties can take the form of a direct fine or the loss of benefits from birth control programs, education funding, and family healthcare. Some couples are permitted to pay a "social maintenance fee" in order to have more children. China's birth-planning policies, while highly controversial from ethical, moral, and international standpoints, are grounded in a direct economic need to manage the country's population.

Population size determines a country's productive potential while also representing large demands on state spending for health, education, and welfare programs (Wang, 2005, pp. 117–128). An enormous population creates a severe economic burden, making population control important for sustaining economic success. The relationship between population health and a country's economy is reciprocal and ongoing.

The dynamics of this reciprocating relationship should be investigated before any governing body authorizes decisions that will enormously impact society. One function of government is to improve the quality of citizens' lives. Governments can take on the responsibility of providing universal access to healthcare services, enforce taxes to redistribute income, and provide subsidies for disadvantaged groups (White, 2000, pp. 74–78). Yet health disparities persist and benefits reach only a portion of the population. China has made a bold move to sustain its economic success by placing restrictions on population growth, aiming to raise living standards through reduced population growth and increased economic stability (Head-Jones, 2004). China also faces the challenge of supplying its large population with quality education and healthcare. Although economic growth has increased, the problems associated with population size can overwhelm potential benefits and may weaken existing support systems (Winckler, 2002, pp. 379–418).

While the one-child policy is controversial, it has been effective in reducing population growth. China's Communist leaders have pledged to focus on environmental protection and quality of life rather than seeking maximum economic growth (Scharping, 2003, pp. 67–88). Capital earned through controlled population growth is intended to be reallocated back into the population, strengthening existing life-support systems. As a result, more resources become available for each individual, improving quality of life through investment in education, healthcare, welfare, public health, and the provision of water and sanitation (Winckler, 2002, pp. 379–418).

China has carried out this population control relatively quickly, but future predictions regarding the consequences of its speed remain uncertain. The dramatic economic growth combined with a rapid decline in fertility rates will have an immense impact on Chinese society.

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