The Fertility Consequences of Air Pollution in China

We quantify how air pollution distorts individuals’ fertility behaviors in China. We document a robust pattern in which increased pollution over time negatively affects the fertility decisions of ethnic Han people, who comprise approximately 92% of the Chinese population. These patterns are evident in both cross-sectional and panel data, when instrumenting for pollution using distant coal-fired plants upwind of cities or thermal inversions that trap pollution. Consistent with the prediction of Becker’s “quantity-quality” (Q-Q) model of fertility, we find that the fertility choices of people who tend to have higher demand for child quality are significantly more sensitive to pollution changes. Pollution does not have a meaningful effect on the fertility decisions of ethnic minorities, which can also be explained under the Q-Q framework. We propose a new “indirect” channel by which pollution adversely affects economic development by distorting fertility behaviors.