| China has the most distorted sex ratio at birth in the world. In 2000, the ratio was 120 boys per hundred girls in China, which is way beyond the biologically stable ratio of 105. Here, I quantify the effects of the one-child policy on the sex ratio in China using an innovative identification strategy across ethnicity (Han and Non-Han), regions and birth orders. The one-child policy, uniquely implemented in China in 1979, imposes a substantial fine on families with "above-quota" births that may increase the sex ratio as parents may commit infanticide of the daughter for the avoidance of fine and an extra draw for a son. By using the Non-Han Chinese that are not subject to the policy as a control group, I identify the effect of the "one-child" policy on the Han-Chinese in urban area and the "one-son-two-child" policy in the rural area by studying the variations of sex ratios and fertility rates in different birth orders. I solve and estimate a structural model in which families face a two-stage problem. First, parents decide whether to quit pregnancy given the existing family structure. Second, if they continue with pregnancy, and given the revealed sex of the yet to be born child, parents make a decision about abortion subject to a stochastic abortion cost. Counterfactual policy experiments are then carried out to examine the effect of a change in the fertility policy on sex ratio. I find that the "Two-child" policy can generate a 8% decrease in the overall sex ratio for rural Han Chinese, compared to a 4% decrease by a 5% reduction in above-quota fine. This suggests that the one-child policy is not as binding as in the 1980s when it was first implemented. |
