Chinas One Child Policy and the Economic Implications

Chinas one child policy Introduction: Vast depletion of natural resources, limited amounts of space, malnourishment, these are all effects of an overpopulation of a country. In the 1970’s, China was faced with the same scenario, which called for an immediate policy that had to be implemented to further delay the unbearable impacts that have arose. China would not wait and lay victim to prove that Thomas Malthus’ population hypothesis could in fact prove true. Therefore the 1 child policy was created, and implemented in China to help control the threat of overpopulation and vast depletion of natural resources.

However with that in mind, the policy was due to have more effects than a merely simple decrease in population growth. What other impacts did such a policy bear? The question this paper inquires is whether China’s implementation of the 1 child policy led to an increase in the output per worker? To be more specific, was the increase determined mainly by an increase in capital per worker, along with an increase in the savings rate? This paper will be divided amongst 3 different sections.

Section 1 will give some additional background on China’s 1 child policy, which will be followed by the targeted impacts of the policy in section 2, finally there will be a linkage between the impacts of the policy accompanied by the changes in output per worker, along with concluding remarks. Section 1: Background of the 1 child policy The policy, which was implemented in 1979 had the original intent of reducing the demand on natural resources, maintaining a steady labour rate, and reducing unemployment caused by surplus labour.

China’s standard of living much more resembled that of a 3rd world country, which forced them to seek 1st world status, with the idea of slowing down their high population growth rate of 2. 76% in 1970. The 1 child policy to summarize included the following; local residents requiring permission before having their first born child, strictly enforced laws for urban residents/government employees “such as incentives for compliance, fines for non-compliance, confiscation of private belongings, and dismissal from work for non-compliance. However there were some exceptions to having more than one child, such as; * “If the first child has a disability, the parents may be granted permission for a 2nd child * If both of the parents work in a high risk environment (mining) * If the parents themselves are from 1 child families * If the first child is a girl, the parents may be given consent to have a 2nd child after 5 years of the first born. ” Section 2: After the 1 child policy: Possibly, the most shocking factor of the policy came from the drop in the Chinese fertility rate from 2. % in 1979 to 1. 7% in 2004. This result can be shown graphically (gathered from the same source) It is more than evident from this information that the 1 child policy had a decreasing effect on the population growth rate. If that’s not enough, then it is estimated that the policy had the effect of preventing 250 – 300 million births over the course of 25 years (1979 – 2004). I plan to do a lot more comparison of data from before and after the policy was implemented in this section for my final draft (just keeping in mind).

Section 3: Linkage between the results of the policy with output per worker Now to tie in the effects of china’s 1 child policy along with the cause for the increase in output per worker, I will use data from sections 1 and 2 which will show an overall decrease in the population growth rate. Two assumptions are formed from this result; 1. Due to the implementation of the 1 child policy, the average Chinese household expenditures will tend to decrease on the belief that having fewer children will lower the cost for parents having 1 child as opposed to 2. And the other assumption being . As tradition holds in most cultures (but more so in developing countries), the children would usually watch over the parents when transitioning into adulthood. With the decrease in the population growth rate along with the fertility rate, this means that more families are having fewer children, which means they will be receiving less benefits if in fact there were 2 children. What this forces Chinese adults to do, is no longer rely on future benefits from children and therefore, put more money away for themselves in retirement. Effectively increasing the savings rate.

Now as theory holds (ceteris peribus) with a decrease in the population growth rate (n), this shifts the depreciation curve down and to the right, effectively increasing the capital per worker, along with a proportional increase in output per worker (provide much more analysis and effects along with a diagram for the final copy). However we don’t stop there, now the savings rate has also increased in the process, which effectively shifts the savings curve up to a new higher level (ceteris peribus), increasing capital per worker by an even higher amount and leading to an even higher increase in output per worker. again more info and a diagram will be provided for the final copy). Conclusion: Here I will make some concluding remarks, I will restate what I have talked about (summarize). A question was asked near the beginning of this paper, if China’s 1 child policy would in fact be able to increase output per worker. According to the analysis I have just given, it should be seen that due to the effects that have transpired, China’s capital per worker and output per worker, should in fact increase due to the implementation of the policy