Working Paper: NBER ID: w30165
Authors: Xuwen Gao; Ran Song; Christopher Timmins
Abstract: We incorporate pollution exposure into Becker’s “Quantity-Quality” (Q-Q) model of fertility and quantify how air pollution distorts individuals’ fertility behaviors in China. We document a robust pattern in which increased pollution over time negatively affects the fertility of ethnic Han people, who comprise approximately 92% of the Chinese population. These patterns are evident in both cross-sectional and panel data, when instrumenting for pollution using distant coal-fired plants upwind of cities or thermal inversions that trap pollution. Consistent with the stylized Q-Q model of fertility, we find that increased pollution drives up the parental expenditure per child, which increases the shadow price associated with the number of children and reduces fertility. Consistent with the model, we also find that the fertility choices of people who tend to have higher demand for child quality are significantly more sensitive to pollution changes. Pollution does not have a meaningful effect on the fertility of ethnic minorities, which can also be explained under the Q-Q framework.
Keywords: Fertility; Air Pollution; China; Quantity-Quality Model
JEL Codes: J13; J24; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased pollution (Q53) | increased parental expenditure per child (H52) |
| increased parental expenditure per child (H52) | reduced fertility (J13) |
| Higher demand for child quality (J13) | increased sensitivity to changes in pollution levels (Q53) |
| Pollution exposure (Q53) | increased shadow price of children (J13) |
| increased shadow price of children (J13) | reduced fertility (J13) |
| Pollution (Q53) | fertility of ethnic minorities (J15) |
| Increased pollution (Q53) | reduced fertility among ethnic Han individuals (J18) |