Heterogeneous fertility reponses to the two-child policy: growth-induced domestic migration and income effect

The deteriorating demographic structure in China has already invalidated its one-child policy ineffective. However, smoothing the ripple effects generated by this policy will require more comprehensive population policies. This context led to the introduction of the two-child policy in China. This paper examines the effects of the two-child policy by observing the regions that were previously subject to the one-child rule. The findings indicate that a geographic mismatch between people’s willingness to have children and household income has resulted in an uneven distribution of birth rates following the implementation of the two-child policy, with higher birth rates concentrated in rural areas experiencing rapid urbanization. As the Chinese economy progresses towards a higher level of urbanization, population policies aimed at encouraging larger families will become less effective, as fertility norms will have permanently altered in tandem with the rising costs of urban living. With more affluent populations less likely to have more than one child, understanding how to increase fertility rates in demographic groups that have not fully transitioned to the advanced urban sector will be crucial for developing effective population growth policies.