Parental monetary investments in children: A focus on China

Abstract

In 1979, China began the one child per couple policy throughout the country. In spite of the controversial issues of voluntary participation, the one-child policy has substantially reduced Chinese population growth. How might the policy affect parents' investiment in their children? This article attempts to study paretns' monetary investment in their children in four provinces of China using two-stage least squares procedure based on a survey of 4,000 Chinese children collected in 1990. This study shows that (a) the more children there are in a family, the less the parents invest in each of them; (b) parents seem to treat boys and girls differently; (c) although parents in rural areas invest less in absolute yuan terms, they invest a larger share of their income in their children than do their urban counterparts; (d) the presence of grandparent(s) seems to increase parents' monetary investment in their children; and (e) sibling structure is an important determinant in parents' investment decisions. Last, but not least, it is necessary to use different measures of parents' monetary investment to reveal a more complete and less biased picture of parental investment in children.