INCOME, SOCIAL SECURITY AND CHINESE FAMILIES’ “TWO-CHILD” DECISIONS: EVIDENCE FROM URBAN RESIDENTS’ FERTILITY INTENTIONS

Abstract

The increase in income, the improvement of social security and the decline in the desire for fertility in urban residents have been extremely important social and economic phenomena in China over the past three decades. However, there have been few studies of China’s situations because of the use of long-term birth control. An analysis based on the framework of lifetime utility maximization for individuals indicated that income and social security have substitution effects on the number of births. This study conducts an empirical analysis with data extracted from the Chinese General Social Survey (CGSS). The results show that an increase in income lowers the willingness for fertility, and the endowment insurance system with subsidies lowers beneficiaries’ fertility intentions. Similarly, an increase in income and the improvement of social security decrease urban residents’ “two-child” fertility intentions significantly. Thus, although the steady growth of the economy and the continuous improvement of the social security system have provided the opportunity to relax China’s population policies, the substitution effect of income and social security on fertility intentions also needs to be considered.