One-Child Policy, Marriage Distortion, and Welfare Loss

This seminar will discuss the marriage distortion and the associated welfare loss caused by the One-Child Policy (OCP) in China. Using the variation in the ethnicity-specific assigned birth quotas and different fertility penalties across provinces over time, we first show that the OCP induced a significantly higher unmarried rate and more interethnic marriages. Using sufficient statistics approach, we then derive a formula for the social welfare loss caused by the OCPinduced lower fertility and marriage distortion, and it only depends on the estimated reducedform elasticities. Our estimates suggest that the associated welfare loss is around 3.7 percent of annual household income, with marriage distortion contributing 30 percent of this. These findings highlight the unintended behavioral responses to public policies and corresponding social consequences.

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