The effect of housing price on family fertility decision in China

【Author】

GE Yuhao;ZHANG Xuemei

【Institution】

School of Labor and Human Resources, Renmin University of China;School of Labor and Human Resources, Renmin University of China

【Abstract】

This paper examines the effect of housing price on family fertility decision based on the data of 2014 China Family Panel Studies. We choose housing price in the year of marriage and housing price in the fifth year of marriage as the variables influencing the decisions to have the first child and the second child respectively. We also discuss the mechanisms through which housing price affects fertility decisions by comparing families only having one house and those having two or more houses. Three main results are found in this paper. First, housing price has a significant negative effect on the probability of having children. The probability of having the first and the second child would decrease by 1.8% to 2.9% and 2.4% to 8.8% if housing price increases CNY 1000. Second, housing price postpones the age of females to have the first child. The age at first birth would increase by 0.14 to 0.26 years if housing price increases CNY 1000. Third, there are two theoretical mechanisms explaining the effect of housing price on fertility decision, namely, the crowding out effect and the wealth effect. In reality, the degree of influence from the crowding out effect is much bigger than that of the wealth effect. The results of this paper imply that decline of fertility rate in recent years is related to the rapid increase of housing price and the government needs to restrain the irrational increase of housing price.

【Keywords】

fertility decision;age at first birth;housing price;wealth effect;crowding out effect

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