Heterogeneity in the Child Quality-Quantity Trade-off and Intergenerational Mobility

Examining the heterogeneity in the child quality-quantity trade-off, I show that China's One-Child Policy contributes to decreasing intergenerational income and wealth mobility. The policy imposes penalties for unauthorized births, reducing the likelihood of having a second child and improving the firstborn's health. However, education increases only among children of high-skill workers, which further increases their income. Conversely, children of farmers or low-skill workers accumulate more land or housing assets. The heterogeneous responses stem from different returns and costs of education associated with paternal occupations. The results underscore the importance of considering heterogeneity in parental responses when evaluating fertility policies.