Two-child Policy And Human Capital Investment In Urban Households

Since the reform and opening-up,the demographic dividend has played a crucial role in promoting China's high-speed economic growth.With the gradual emergence of the aging population,the way of China's economic growth is also urgent to change.Especially in the process of moving towards high-quality development,the transition of the demographic dividend for the human capital dividend will play a positive role in China's economic growth in the future.Although China's human capital level has been rapidly developed,there is still a large space for improvement of human capital in education and health,especially compared with developed countries.The key to improving China's overall human capital level is to attach importance to human capital investment in children and adolescents.For a long time,the growth of human capital in China has benefited from the implementation of the “one-child” policy.However,since the“two-child”policy was officially implemented nationwide,the fertility control policy was substantially relaxed.Under the condition of limited resources in the family,households' human capital investment in their children is likely to have“quantity quality trade-off”.In other words,the relaxation of the fertility policy has created new challenges for the accumulation of human capital.In this regard,this paper is intended to focus on the impact of second-child birth on the human capital investment of urban families.On the basis of fertility theory,human capital theory and “quantity-quality trade-off” theory,this paper integrates fertility decision-making and human capital investment decision-making into a unified model framework.Behavioral changes of individual representative families and the direction of change of the overall human capital investment level are analyzed,and the possible impact mechanisms are examined.From the two dimensions of education and health,the paper empirically examines the extent of the impact of the second-child birth on urban household human capital investment and the internal influence mechanism,by using the micro-data of China Household Finance Survey(CHFS)and China Family Panel Studies(CFPS).Take the “selective two-child” policy as a quasi-natural experiment,which means if one side of the couple is a single child,the couple is allowed to have a second child.After solving the endogenous problem,the corresponding research conclusions were obtained.The conclusions of this paper are as follows:Firstly,in the context of the current “two-child” policy,urban households have a trade-off between the quantity and quality of children.(1)From the perspective of education,after the implementation of the “selective two-child” policy,both total and per child education expenditure of dandu households(Households that one side of the couple is a single child)reduce significantly.(2)From the perspective of health,urban households have significantly reduced the probability and cost of health insurance participation for their first child because they gave birth to a second child.The probability and cost of health insurance participation on child of dandu households reduced significantly after the implementation of the“selective two-child” policy.In short,in the case of limited family economic resources,the relaxation of the fertility policy has led to an increase in the number of births,which reduces the human capital investment on child of urban households.Secondly,the level of household income determines the degree of quantity-quality trade-off effect.(1)In terms of education expenditure,after the implementation of the “selective two-child” policy,high-income households are not affected,but middle-income and low-income households are significantly affected.The lower the income level,the greater the trade-off effect of quantity and quality.(2)In terms of health,the birth of the second child does not change high-income households' commercial health insurance expenditure on the first child.For low-income households,since the first child's commercial health insurance participation probability is already low,there will be no change after the birth of a second child.However,for middle-income households,the birth of a second child will significantly reduce commercial health insurance participation probability and cost on the first child.This demonstrates that the quantity-quality trade-off effect is particularly evident in the middle-income class,making it a truly“sandwich layer”.Thirdly,children's individual characteristics will affect the degree of quantity-quality trade-off effect.(1)From the perspective of gender,households whose first child is a girl will not change education expenditure,but will significantly reduce girls' commercial health insurance participation and cost,due to the adjustment in fertility policy.Households whose first child is a boy not only significantly reduce the boy's health insurance and education expenses,but also falls more than the girl's family.This shows that there is a gender heterogeneity on human capital investment that the quantity-quality trade-off effect on boys is more obvious.(2)From the perspective of age,households whose first child is very young will not change child's commercial health insurance participation and cost due to the adjustment in fertility policy.But households whose first child is older will significantly reduce child's health insurance participation probability and cost.Therefore,the quantity-quality trade-off effect of urban households will vary depending on the individual characteristics of the first child.Fourth,the existence of motherhood wage penalty and precautionary savings motive is reason of the quantity-quality trade-off effect.(1)After the relaxation of fertility policy,the labor participation of adult women has decreased significantly,and the income of working women has decreased significantly also.The motherhood wage penalty of women due to childbirth will lead to more limited economic resources and tighter budget constraints in households,which make family have to reduce the human capital investment on children.(2)After implementation of the “selective two-child” policy,the total and per capita consumption of the dandu households decreased significantly,especially consumption on transportation,communication,and clothing.Urban households mainly respond to uncertainties in future expected expenditures by compressing consumption.This phenomenon is particularly evident in middle-income households.This shows that the uncertainty of expenditures generated by the birth of second-child has led to new precautionary savings motive,which is also a mechanism for the decline of human capital investment.According to the research conclusions of this paper,the following policy implications are proposed:(1)Implement public education policies and ease the burden of family education.While adjusting the fertility policy,it is necessary for the government to introduce and implement the corresponding public education policy at the same time,which can help reduce the negative impact on the accumulation of human capital.(2)Improve the medical and health protection system,promote children's participation in health insurance.The government should pay more attention to children's social medical insurance,try its best to bring children's special health needs into the social medical insurance system,and lower the threshold for children to participate in social medical insurance.(3)Pay attention to women's labor protection policies and stabilize their income sources.To give full play to the effect of the “two-child” policy and avoid the negative impact on human capital,the government should pay attention to the protection of women's rights and interests.On the one hand,introducing policy subsidies can encourage women to better balance careers and families.(4)Reduce uncertainty and foster positive expectations.It is necessary for the government to implement a series of livelihood policies,such as stabilizing market prices,reducing income risks,developing formal finance and so on.These are ways to help reduce uncertainty,foster positive consumer expectations,which can lay a solid foundation for promoting the implementation of the fertility policy.The innovations in this paper are: First,in terms of research content,national data is used to focus on the policy effects of the “selective two-child” policy.On the one hand,from the perspective of adjustment of the fertility policy,this paper analyzes whether there is a quantity-quality trade-off in Chinese urban households.Some literatures studying the two-child birth behavior of Chinese households mainly select sample families in some regions where the fetility policy is relaxed,lacking national representativeness that make the estimated results have sample selection bias.One of the research focuses of this paper is to investigate whether the two-child birth motivation will result in a decrease in family human capital investment,leading to a decline in the quality of children.On the other hand,the mechanism of two-child birth affecting family human capital investment has been tested.From the three channels of motherhood wage penalty,intergenerational distribution and precautionary savings motive,we consider how second-child birth lead to changes in household human capital investment.Secondly,in the research method,the DID model was constructed with the “selective two-child” policy as a quasi-natural experiment,which effectively solved the endogenous problem in the analysis of the impact of the second-child birth on human capital investment.We adopts the “selective two-child” policy implemented nationwide in 2014 as a quasi-natural experiment.Households that are not affected by the policy before and after are regarded as “control group”.Households that are affected after implementation of the “selective two-child” policy are considered “experimental groups”.Therefore,a DID model can be built to estimate and solve the endogenous problems in this paper.Thirdly,in terms of research conclusions,this paper finds that the quantity-quality trade-off exists in the current decision-making process of second-child birth in China.Motherhood wage penalty and precautionary savings motive are important factors that lead to quantity-quality trade-off effect.The shortcomings of this paper are: First,the policy effect of “comprehensive two-child” policy has not been tested.The long-term effect of “two-child” policy remains to be examined.Only from the perspective of “selective two-child policy”,we investigated the policy effect on urban households' human capital investment on child,but did not test the impact of “comprehensive two-child” policy on human capital investment.In addition,at present,China's fertility policy has just been relaxed.The analysis of this paper from the existing data can only be seen as the short-term effect.The degree of the long-term policy effect is still unclear.Second,limited by data,we do not provide an in-depth analysis of time allocation.Our research is only analyzed from the perspective of money expenditure,but time investment is also one of the keys that cannot be ignored in human capital investment.Third,there is no discussion of rural households and possible changes in the urban-rural gap.These will be the focus of follow-up research.