One-Child Policy, Marriage Distortion, and Welfare Loss

Dr HUANG Wei is the President’s Assistant Professor in the Department of Real Estate and Department of Strategy and Policy at National University of Singapore. Dr Huang received his PhD in economics from Harvard University in 2016.
Please see Dr. Huang's CV for more information.

This paper studies the marriage distortion and the associated welfare loss caused by the One-Child Policy (OCP) in China. Using the variation in the ethnicity-specific assigned birth quotas and different fertility penalties across provinces over time, we first show that the OCP induced a significantly higher unmarried rate and more interethnic marriages. Using the suf-ficient statistics approach, we derive a formula for the social welfare loss caused by the OCP-induced lower fertility and marriage distortion, and it only depends on the estimated reduced-form elasticities. Our estimates imply that the welfare loss caused by lowered fertility and marriage distortion is 2.6 and 1.1 percent of annual household income, respectively.