Family Planning Policy in China: Measurement and Impact on Fertility

The extent to which China's family planning policy has driven its fertility transition over the past decades is debatable. The disagreement is partly sourced from the different ways of measuring the policy. Most existing measures, constructed on the policy history, generally, do not include complete secular and cross-sectional policy variations, fail to heterogeneously reflect people's exposure to the policy, and often suffer from endogeneity. This paper reviews the entire history of China's family planning policy and accordingly, proposes a new policy measure that integrates the policy variations more completely, heterogeneously, and exogenously by using the cross-sectional data of the China Health and Nutrition Survey. The new measure estimates the effect of policy on fertility and generates negative regression coefficients that well reproduce the history. As for the contribution of the policy to fertility transition, the measure explains a sizable level shift of fertility for major cohorts, but only accounts for a small portion of the fertility decline over generations. In addition, a more-educated woman, a woman residing in a better-developed coastal province, or a woman whose first child is a son tends to desire fewer children and thus, receives lighter pressure from the policy. Other than fertility, a woman would delay her marriage in response to the policy, particularly when it is strongly enforced. Finally, the paper shows that using an incomplete measure could systematically underestimate the effect of policy on fertility and adopting an endogenous measure or a measure lacking heterogeneity could even produce a positive effect of the policy.