Working paper number:2019-34
Paper Abstract:Family planning plays a central role in contemporary population policies. However, little is known about its long-term consequences in old age. In this study, we examine how family planning policies implemented in China in the early 1970s affect the quality of life of the Chinese elderly forty years later. The direction of the effect is theoretically unclear. On the one hand, having fewer children allows parents to reallocate more resources to themselves, improving their well-being. On the other hand, having fewer children also leads to less care and companionship from children in old age. To empirically investigate the effect of family planning, we identify the causal impact by exploiting the provincial heterogeneity in implementing the "Later, Longer, Fewer" (LLF) policies in the early 1970s. We find that the LLF policies greatly reduced the number of children born to couples by 0.85. Parents also receive less support from children in terms of living arrangements, inter vivos transfers, and emotional support. Finally, we find that the impacts of the family planning policies on elderly parent's physical and mental well-being are drastically different: whereas parents who are more exposed to the family planning policies consume more and enjoy slightly better physical health status, they report more severe depression symptoms.