Heterogeneity in the Multidimensional Child Quality-Quantity Trade-off and Its Consequences for Intergenerational Mobilit

This paper studies the heterogeneity in the trade-off between child quantity and different dimensions of child quality. I test how parents adjust investments in their firstborn children’s health, education, and wealth in response to changes in child quantity. I then check whether there is heterogeneity across parental occupations for each dimension of child quality. To identify an exogenous change in child quantity, I use variation in the strictness of fertility restrictions in rural China. I find that stricter fertility restrictions reduce the number of siblings and improve the health of all children with parents in different occupations. But the impacts on other dimensions of child quality vary significantly by parental occupation. In response to stricter fertility restrictions, only parents in high-skill occupations invest more in their firstborn children’s education. Farmers pass on more land, while low-skill workers transfer more financial and housing assets to their firstborn children. The heterogeneous responses to a reduction in child quantity have consequences for labor market outcomes and intergenerational income mobility. While children of farmers and low-skill workers experience little change in labor market outcomes, children of high-skill workers are more likely to work in a high-skill job and earn a higher income when having fewer siblings

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