The impact of the relaxation of the One-Child Policy on employment

Abstract

This paper examines how number of siblings affects employment under the relaxation of the One-Child Policy in China. We explore the One-and-A-Half-Child Policy in 1980s and examine its long-term impact on siblings and employment. With the data from 2010–2018 China Family Panel Studies, we find that individuals tend to have a larger number of siblings and have a higher probability of working in the places where the One-and-A-Half-Child Policy was implemented earlier. Using the degree of the impact of this policy as an instrumental variable for number of siblings, we find that one more sibling would increase the likelihood of working by 9.0 percentage points and increase the likelihood of working in the non-agricultural sector by 5.1 percentage points. Females are more affected by the relaxation than males. We also discuss the major mechanisms through which siblings affect employment. We find that the care-sharing effect of siblings increases labor supply and the social network effect of siblings brings more job opportunities and increases employment. The One-and-A-Half-Child Policy improves the labor market outcomes through both the channel of sharing care and the channel of social network.