Abstract
This paper investigates the effects of the number of children on household debt. Using data from the China Household Finance Survey in 2015 and 2017, this paper finds a positive relationship between the number of children in a family and household debt. To obtain a causal explanation via further analysis, this paper creates a natural experiment based on the new fertility policy implemented in China since 2016, and the results show that a marginal child significantly increases a family's household debt. Moreover, heterogeneous analysis reveals that the marginal child's effect on debt is larger both in households without a child before the marginal child's birth and in households located in urban areas. Finally, the results of this paper partly explain why the fertility rate has been low in China in recent years. The paper suggests feasible policies to raise the fertility rate.
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