Family Size and Intergenerational Income Mobility: Evidence from China’s One-Child Policy

Abstract

This paper examines the effect of family size on intergenerational income mobility by exploiting the plausibly exogenous variation in fertility caused by the One-Child Policy in China. This paper finds that 2SLS estimates for the family-size effect are both statistically and economically distinguishable from the OLS estimates, indicating the endogeneity in the single equation model. The IV estimations reveal a positive but insignificant effect of family size on intergenerational income mobility, and this result tends to be unaffected by transitory shocks in earnings and life-cycle bias.