Topic: The One-Child Policy and Household Savings

Speaker: Keyu Jin, Assistant Professor of Economics, London School of Economics and Political Science

Date: June 3rd (Wed.)

Time: 2:00-3:30pm  

Location: Building 1, Room 100

Language: English

Abstract:

We investigate how the ‘one-child policy’ has impacted China’s household saving rate and human capital in the last three decades. In a life-cycle model with endogenous fertility, intergenerational transfers and human capital accumulation, we show how fertility restrictions provide incentives for households to increase their offspring’s education and to accumulate financial wealth in expectation of lower support from their children. Our quantitative OLG model calibrated to household level data shows that the policy significantly increased the human capital of the only child generation and can account for a third to 60% of the rise in aggregate savings.  Equally important, it can capture much of the distinct shift in the level and shape of the age-saving profile observed from micro-level data estimates. Using the birth of twins (born under the one child policy) as an exogenous deviation from the policy, we provide an empirical out-of-sample check to our quantitative results; estimates on savings and education decisions are decidedly close between model and data.

About the speaker:

Keyu Jin is Assistant Professor of Economics, London School of Economics. Professor Jin received her B. A. in Economics with high honors from Harvard College in 2004, and a Ph.D. in Economics from Harvard University. Prior to joining the London School of Economics in 2009, she had fruitful research experience in large corporations and institutions such as Morgan Stanley and Federal Reserve Bank of New York. Her papers have appeared in Journal of International Economics, American Economic Review, and other leading economics journals. She has also been on the editorial board of Review of Economic Studies. Her research interests are in international finance, macroeconomics, international trade and the Chinese economy.