Study: Income Inequality Linked to Lower Fertility Rates in China
The Journal of Advanced Computational Intelligence and Intelligent Informatics published a fascinating little study (Income Inequality and Fertility Behavior: An Empirical Study on China by Weicong Wu and Xindong Zhao) that finds that widening income gaps are associated with declining birth rates across China, potentially helping explain the country's persistently low fertility.
The big picture: As China grapples with a demographic crisis and shrinking population, understanding factors influencing fertility decisions has become urgent. This research provides a fresh perspective on the complex relationship between economic disparities and reproductive choices.
Key Points:
For every 1-point increase in the Gini coefficient (a measure of inequality), fertility motivation decreased by about 0.08 points.
The negative effect of inequality on birth rates was strongest in China's more developed eastern regions, followed by central regions, and weakest in the west.
In 2022, China's population declined by 850,000 - the first drop in 61 years.
Between the lines: Income inequality appears to impact fertility differently across income groups:
No significant effect on low-income groups
Significant negative effect on middle-income
Positive effect on high-income
How it works: The researchers propose two fundamental mechanisms:
Imitation of high-end consumption crowds out spending on children
Inequality incentivizes upward mobility efforts, reducing time for family
The study also notes that income inequality can negatively affect fertility behavior by reducing:
Social trust
Subjective well-being
About the study: The research utilized both macro-level data from 202 prefecture-level cities (2010-2019) and micro-level survey data from individuals.
The study has limitations, including challenges in fully addressing potential endogeneity and the use of urban-rural income ratios as a proxy for overall inequality.
What's next: The authors suggest policy interventions to address income inequality, including:
Improving initial income distribution systems
Promoting rural income growth
Reducing regional development disparities
Addressing monopoly profits in specific industries
My Déjà Vu and a History Lesson: You might be wondering, "What's so interesting about this paper?" The answer lies in a surprising historical parallel.
In 1937, John Maynard Keynes delivered a lecture titled "Some Economic Consequences of a Declining Population." This was during a time when many, including Keynes himself, viewed overpopulation as a pressing issue and considered a reduction in global population desirable. However, Keynes's lecture took an unexpected turn, cautioning against this prevailing wisdom and arguing that declining populations could lead to severe economic consequences.
What's truly fascinating is that Keynes's proposed solution bears a striking resemblance to what Weicong Wu and Xindong Zhao suggest in their recent paper. Keynes argued:
"With a stationary population we shall, I argue, be absolutely dependent for the maintenance of prosperity and civil peace on policies of increasing consumption by a more equal distribution of incomes and of forcing down the rate of interest."
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