Differential Fertility and Economic Opportunity: Evidence from China’s One-Child Policy

Using China's one-child policy (OCP) as a quasi-natural experiment, we demonstrate that differential fertility between socioeconomic groups exacerbates intergenerational income inequality. Rural or poorer families, who are less constrained by the OCP than urban or richer ones, tend to have more children but invest less in their human capital development. Given the crucial role of human capital in determining earnings, this disparity leads to persistent income inequality across generations. Wealthy offspring are more likely to maintain economic advantage, while those from disadvantaged backgrounds often remain trapped in poverty. Our estimates suggest that the OCP contributes to approximately 25% of the decline in intergenerational income mobility in China.