Topic Area: Fertility Control
Geographic Area: China
Focal Question: Does Government Enforcement of Fertility Control Promote Sustainability?
Sources:
(1) Carol A. Scotese and Ping Wang, "Can Government Enforcement Permanently Alter Fertility? The Case of China", Economic Inquiry, October 1995, p 552-569.
Reviewer: Caitlin P. Lane, Colby College '96
Review:

In developing countries, per capita output growth is often slowed by high birth rates. Traditional values, ignorance of birth control technology, and labor intensive farming all play a role. For this reason, many developing countries experiencing high birth rates have adopted population control policies. This case analyzes the impacts of control policies used in China. The results show that "only preference shifts, involving education, health care and the employment and social status of women, can generate a statistically significant long-run decline in fertility growth. However, the government's enforcement power can explain some short-run movements in fertility". This case is interesting, as due to the strong influence of the communist party, the government can easily regulate an individual's life, including control over housing, employment and salaries.

The People's Republic of China is the only country to use quotas on child bearing decisions. In 1970, the government issued three reproductive norms: late marriage, longer spacing between births and fewer children. Men were encouraged to marry no earlier than 28 yrs old (25 yrs in rural areas) and women no earlier than 25 yrs old (23 yrs in rural areas). After the first child, couples were encouraged to allow four years between any subsequent births. The fewer children norm suggested two children for urban families and three for rural ones. In 1979, authorities limited households to only one child.

This study uses economic theory and econometrics to assess the main sources of fertility fluctuations in China. It focuses on the relationship between government enforcement of population control policies and fertility outcomes. It allows the fertility rate to be affected by: 1)household preferences, including alterations in taste as well as in education, health care and the changing role of women, and 2) production technology, which mostly captures changes in agricultural output or income.

Since one cannot directly measure the Chinese government's ability to enforce its birth-planning guidelines, the growth rate of the ratio of government administration expenditures to total government expenditures is used. The former includes spending on the armed police, public security, prosecutorial agencies, and the justice system. The latter includes all government expenditures. Fertility is measured by the total fertility rate and aggregate output by total grain production. All data are observed annually and the estimation period covers the years 1952 to 1987.

Scotese and Wang use a neoclassical model to motivate their empirical work. The usefulness of the model depends on its ability to approximate family decision making under government constraints. The family decisions refer to consumption and fertility decisions, while the constraints refer to quotas and national birth planning guidelines. A representative household will determine the number of children to bear. Raising children is costly in three respects: 1) given the output level, an increase in family size lowers per capita capital and output; 2) increasing time costs must be paid out of leisure time; and 3) it is costly to violate national birth-planning guidelines.

Fines are levied according to how many children beyond the national guideline a couple bears. The payments are often taken out of both parents' incomes and continue until the child is fourteen to sixteen years of age. Rural families who violate the guidelines may also receive the least productive agricultural lots and be limited in their access to "private" markets where excess products can be sold at a favorable price. In this model, the typical rural household is assumed to choose consumption, leisure, fertility, and capital accumulation to maximize lifetime utility.

Periods of increasing enforcement in China occurred during 1958-61, 1967-67, 1970-76, and 1978-83. During these periods, the two programs mentioned earlier were initiated. The earlier campaign promoted the concept of marrying and having children later, waiting longer between births, and bearing fewer children. The other program, beginning in 1979, sought to limit fertility to one child per couple. Results show that the program was initially successful; however, as enforcement ability decreased, fertility growth failed to decline further in response to this government effort.

The study identifies a shock to government enforcement power, a technological shock to aggregate (agricultural) output, and a fertility preference shock. A shock is characterized by any unexpected changes occuring. Fertility preferences will change as a result of the development process for a number of reasons. A decrease in infant mortality may lead households to have fewer births for any given number of desired offspring. As opportunities for women in the workforce increase, the opportunity costs of bearing children rises. Also, an increase in education may lower the number of desired children due to higher valued alternative uses of time. Finally, as health systems develop, people become better informed on the use of contraception and it becomes more widely available at a lower cost.

Government power shocks (significant unexpected changes in government leadership) had significant negative impacts on fertility growth during 1956, 1959-61, 1967-68, 1971-72, and 1979-80, and significant positive impacts during 1962 and 1969. The periods of negative fertility growth correspond to the initiation of campaigns to promote birth planning and times of unusual political control (The Great Leap Forward 1959-62 and the Cultural Revolution 1967-68). The positive fertility growth numbers reflect the return to political stability after the political campaigns and before the birth-planning campaigns were strongly reactivated.

Output shocks (regarding agricultural production) had significant negative impacts on fertility growth during 1958-60 and 1969 and significant positive impacts during 1962-63 and 1978-79. Declines in fertility during the two periods corresponded to an agricultural crisis and an output decline due to the Cultural Revolution. The positive impact of output on fertility growth in the early 1960's was a result of a revival in agricultural production and success, while the effect in the late 1970's reflects the influence of economic reform.

Preference shocks (changes in individual fertility preferences) had significant negative impacts during 1973-78 and 1982-83 and significant positive impacts during 1963, 1968, 1980 and 1986-87. One explanation for this is that the fertility decline of the 1970's began with a governmental thrust in 1971 and 1972, but preferences became more important in subsequent years. The peaks correspond to the institution and repeal of the late marriage law and the introduction of the responsibility system to agricultural production. The responsibility system creates an incentive to have more children.

The study finds that a lower fertility rate is a result of an adverse shock to agricultural output and a preference shift away from fertility. Government enforcement appears to induce only short term decreases. The empirical evidence suggests that only shocks to preferences (rather than government power) have induced long fertility cycles in China. The historical decompositions show that the sustained fall in fertility experienced by China in the 1970's is primarily explained by preference shifts. The results suggest that population control is not sufficient to promote economic development or sustainability without permanent shifts in individual preferences.