Wednesday, February 26, 2014

Power Couples in Urban China

Was China's One Child Policy a binding constraint?  The NY Times reports that for some households the answer is "no".  Consider a simple urban economics model where apartments are very expensive in Superstar Cities such as Beijing and Shanghai and where both university educated spouses work full time with ambitious career goals.  Such power couples may choose "quality" over "quantity" of children.  A household who has one child has more disposable income and spend more quality time with this child.  Given China's competitive school admissions process, the forward looking family might choose to have 1 rather than more.  Future demography research should study this topic.