Family Planning, Family Size And Intergenerational Income Mobility

In the process of reform and opening up, the Chinese government has taken "control" policy with population while "decentralization" in economic area, setting birth number of every family. With less children, spoiling child especially in one-child families become a common scenario in China. "Little Emperors", "Little Princess" phenomenon was once a hot topic. At the same time, income inequality in China as a significant feature of the present stage, cause widespread concern. Besides inequality within the same generation, the unequality transfer significantly between generations. In recent years, phenomena of "rich, poor second generation" and other second-generation groups highlighted the shortage of society mobility. This makes society question whether there is a link between these phenomenons? With less children, parental care children more, and whether this strengthen the intergenerational transfer of economic position? What is the relationship between family size and the intergenerational income mobility? Considering the fertility policy in China, does family planning help individuals to get rid of restrictions origin, getting better life form their bornth? Or it makes individual restricted by family background severely, hindering the intergenerational income mobility?China’s family planning policy is gradually produced in the practice of the government to control the population, so different arrangements for different groups. In general, compared to rural households, urban households are allowed to bear less; and compared with minority families. Han families are constrained more. This paper empirically tests the impact of family planning on family size in order to assess the effects of family policies, and found that:on the one hand, family planning significantly reduces the number of children, reducing family size, on average, one less of the allowed number will reduced 0.025 children on average; on the other hand, the role of the family planning policy on family size are waning.As a part of the family, aiblings play an important role in one’s life, and the role can be roughly summarized as follows:(1) competitor of family resource; (2) companion:(3) cooperators to support parents; (4) helper; (5) supporter. Especially in the society valuing family kinship, siblings become more important. Because our social security system is not perfect and the market is still in transition, the impact of siblings may be more important and complex. So, how will family size affect individuals? On human capital, on the one hand, siblings compete for family resource, more children, more dispersed investment, and less human capital investment for every child. On the other hand, siblings can make up for lack of investment resources form parents especially time, thus positively affect individual human capital. On social capital, human capital of siblings is an important part of one’s social capital, less siblings will certainly do harm to the overall level of one’s social capital. However, due to the "quantity and quality trade off’, less siblings will help to improve human capital of the survivors, and increase the positive effect of every single siblings for one’s social capital. So make clear the effect of family size on human capital or social capital is difficult, and it needs empirical testing.Meanwhile, the family size will affect the relevance of fathers and sons in incomes which is just income intergenerational income mobility. "Impact of family size on intergenerational income mobility" and "quantity and quality substitution" are analysis of the same problem but different emphases. Based on discussion of theory, the article further considers human capital and social capital together and analyze the effect of siblings on intergenerational income mobility by a family model. The model concluded that in the case of family planning, intergenerational mobility negatively correlated with the number of children that allowed.Considering China’s specific arrangements of family planning policy, in general, compared with the urban and Han, the rural and minorities are allowed to born more which means that under the same conditions, intergenerational mobility for the rural and minorities will be worse, which is consistent with existing researches.Next, from macro perspective of intergenerational income elasticity, the article empirical investigate the relationship between family planning and intergenerational income mobility. The results showed that:first, in general, by reducing family size the family planning improved intergenerational income mobility. Second, differences in intergenerational income elasticity between urban and rural areas, the Han and the minorities can be explained by the arrangement of the family planning to an extent. After calculation,10.22% of the difference between urban and rural and 13.78% of the difference between the Han and minority in intergenerational income elasticity can be explained by the different family planning policy arrangement. Third, for families of different income levels, family size effect is different. Smaller family size will do well to low-income families to increase their intergenerational income mobility and harm to high-income families. As for middle income families, family size effect is no longer significant. Thus, the family planning policy does help low-income families out of "intergenerational mobility of low-income trap", but also exacerbated the "rich second generation" phenomenon. In fact our fertility policy arrangement implied logic that "the rich bear fewer, the poor bear more". Policy arrangements with maternity care in rural areas and minority will do harm to intergenerational income mobility of all, minorities and Han, urban and rural. Due to the different impact of family size on different income families, the government should not take the easy "one size fits all" approach when adjusting the family planning policy. Taking into account family size in favor of intergenerational income mobility of low-income families, even when relaxing family planning policy, policy should also encourage low-income have less children. Allowing high-income groups have more will be in favor of intergenerational income mobility actually.Thereafter, by constructing intergenerational mobility indicators at the individual level, the article directly investigate the impact of family planning on the individual intergenerational mobility, as a microscopic view of family planning’s influence on intergenerational income mobility.Based on education, the article constructed the index of individual intergenerational mobility, and empirical test the relationship of family size and individual intergenerational mobility, concluded:first, family size significantly negatively affect the individual intergenerational up mobility, more siblings, and more difficult to mobile upward from his father. Second, there is family heterogeneity in the family size impact. In families that father with fewer schooling, the negative impact of siblings is more obvious, but in group that father with more, it is no longer significant. Third, there are two kinds of effects of siblings to individual intergenerational mobility, positive and negative. In families that father with fewer schooling the negative effect is larger and the total effect is negative which means more siblings, smaller probability to mobile upward. However, in families that father with more education, the positive effect becomes larger, offsets the negative, and makes the total effect no longer significant. By lessening family size the family planning increase the probability of individuals to mobile upward. The empirical results verify it, and are robust. This further illustrates the family planning policy that care for minorities and the rural are actually not conducive to individual upward intergenerational mobility in these regions.In order to examine the effect mechanism of family planning, the article decompose the impact by studying the impact of family planning on children’s personal income. The results found that "population quality trade off on human capital level is true in China, and the implementation of family planning is effective to increase the individual’s years of education to improve the level of human capital of the individual, but the role of siblings in social capital were weakened at the same time.The government introduced the family planning policy aim to enhance the quality of the population by population control, and accelerate China’s economic development. Indeed, in terms of level of education, family planning has changed the family structure, liberated the children from the adverse situation in the domestic competition for resources, get more access to education, especially for girls. However, knowing the competition between siblings, we should also concern about the positive impact of siblings at the same time, understand the comprehensive role of siblings in one’s life. Especially under our current social security system, the positive effect of siblings as insurance mechanism brings more, so the issue of siblings need more research.Family planning policy has always been the hot issues of concern to the community, academic area also pay much attention. Study of the impact of Family Planning on intergenerational income mobility is not only to broaden awareness of the consequences of the policy, rich demography, economics research, but also has a certain significance for population policy adjustments.There are some innovations in this study. First, the choice of research questions. Existing research on family planning policy’s consequence are often from economic growth and static income inequality, less from a dynamic income inequality. Examine the consequences of family planning policy from perspective of intergenerational income mobility, the article will fill this gap to some extent.Second, with methods from macro and micro together. In this paper, not only from the social macro perspective to stduy the overall impact of family planning on intergenerational income mobility, but also to analyze the microstructure within the family, further tested on the micro level, making the conclusions more convincing.Third, more comprehensive consideration of the impact of siblings. Considering human capital and social capital, the article analyze the positive and negative effect of siblings, making a more comprehensive consideration of the impact by siblings.Fourth, the consideration of endogeneity. Not only when looking at the impact of family size but also when in the direct study of the impact of family planning, this article discusses the endogeneity of explanatory variables, and resolve the problem from adding control variables to finding instrumental variables.