Fertility and Sex Selection: Analysis and Policy in Asia

1
Fertility and Sex Selection Analysis and Policy
in Asia

• Public Finance Lunch
• October 30th, 2006

2
Overview

• Motivating Topic The Missing Girls of China
  India
• Background (focus on China)
• Theoretical Model of Sex Selection Decision
• Empirical Results
• Policy Implications

3
Chinese Births following Girls
One Child Policy
4
Section 1Fertility Policy in China
5
Fertility Policy in China

• Pronatalist Policy 1949-1969
• Two is Enough 1970-1979
• Strict One Child Policy 1979-1983
• Opening Small Holes, Close Large Ones 1984
• Today Federalism

6
Fertility Policy in China

• One Child Policy (35)
• Urban residents, population near cities
• 1.5 Child Policy (54)
• Rural areas in inner provinces
• Two Child Policy (10)
• Rural areas in outer provinces
• Three Child Policy (1)
• Residents in very remote areas

83 of Missing Girls
7
China One Size does not Fit All
8
Enforcement of Policy
First, we employ reasoning and education. Then,
we order a pregnancy fine and forced abortion.
For persons with above-quota births, we mete out
fines for those with many births, we confiscate
land and revoke household registration.
Chinese 1995 Survey on birth control practices
Scharping 2003, p. 147
9
Fertility Fines in China
Source Scharping 2003
10
Section 2Impact of Declining Fertility on the
Sex Ratio
11
High Fertility, Low Sex Ratios
Low Fertility, High Sex Ratios
12
High Fertility, Low Sex Ratios
Low Fertility, High Sex Ratios
13
Q Should we think the cost of sex ratio
distortion is large?
14
Welfare Implications of Sex Selection

• Dead Weight Loss in Marriage market
• Among those who marry, women do relatively better
  and men do relatively worse. ZERO SUM
• Increase in unmatched men imposes DWL
• 23 million boys will not find Chinese brides
• The guang guan Bare Branches
• It wont fix itself!
• Parents prefer an unmarried son to a married
  daughter.

Poston and Glover (2000)
15
Policy Current Proposed

• Care for Girls campaign
• Outlawing sex selection
• Black Market for ultrasound
• 3. Raise fertility limits???

Not Working
Price is 6-40 - Cheap
Original Problem!
4. Social Insurance for those fail to have a son
Thought experiment. If sons provide a dollar
value ?, one could tax those with a son ½ of ?
and reward those with daughters with ½ of ?
16
Section 3Sequential Model of a Mothers Decision
17
Decision 1 Having a 2nd Child
Stop
G
G
Boy
Girl
Decision 2 Sex Selection
GB
G(G)
Abort
Decision 3 Having a 3rd Child
Stop
GG
GG
Boy
Girl
GGB
GG(G)
Decision 4 Sex Selection
Abort
GGG
18
Features of the Model

• Mothers place a value of ? on a first-born son.
• Mothers want a son but face a fertility limit
• that is enforced by dollar fines F1 and F2
• for 1st and 2nd extra children. (2nd and 3rd
  Births)
• 3. Mothers have access to a sex selection
  technology that is 100 effective and costs A.
• 4. Mothers with a son never have another child.

19
Decision 1 Having a 2nd Child
Stop
G
G
Boy
Girl
Decision 2 Sex Selection
GB
G(G)
Abort
Decision 3 Having a 3rd Child
Stop
GG
GG
Boy
Girl
GGB
GG(G)
Decision 4 Sex Selection
Abort
GGG
20
4th Decision Abort or Stop

• Abortion Payoff
• Dont Abort Payoff

21
Intuition of 4th Decision

• Abortion when value of a son is large relative
  to cost of abortion

22
Decision 1 Having a 2nd Child
Stop
G
G
Boy
Girl
Decision 2 Sex Selection
GB
G(G)
Abort
Decision 3 Having a 3rd Child
Stop
GG
GG
Boy
Girl
GGB
GG(G)
Decision 4 Sex Selection
Abort
GGG
23
3rd Decision Kid or Stop

• Have a kid
• Dont

Payoff of Abortion
Payoff of Stoppingexp(0)
24
Intuition of 3rd Decision

• Have a kid when son preference is large relative
  to fine.
• Have a kid when payoff in round 4 is large, which
  happens when son preference exceeds abortion cost

25
Decision 1 Having a 2nd Child
Stop
G
G
Boy
Girl
Decision 2 Sex Selection
GB
G(G)
Abort
Decision 3 Having a 3rd Child
Stop
GG
GG
Boy
Girl
GGB
GG(G)
Decision 4 Sex Selection
Abort
GGG
26
2nd Decision Abort or Keep

• Abort
• Keep

Payoff of 3rd Kid
Payoff of Stoppingexp(0)
27
Intuition of 2nd Decision

• Abort when ? A gtgt E(V3)
• E(V3) .51? F2 .49 E(V4)
• Abort if third fine is large!

Extreme case Mother will never die without son.
Now or Later scenario ? Abort when F2 gt .49A
28
Decision 1 Having a 2nd Child
Stop
G
G
Boy
Girl
Decision 2 Sex Selection
GB
G(G)
Abort
Decision 3 Having a 3rd Child
Stop
GG
GG
Boy
Girl
GGB
GG(G)
Decision 4 Sex Selection
Abort
GGG
29
1st Decision Kid or Quit

• Abort
• Keep

Payoff of 3rd Kid
Payoff of Stopping
30
Heterogeneity
Maximum Likelihood Estimation Choose optimal
?1- ?5 given observed data
31
Basic Intuition of the Model

• Abort 3rd Girl if Value of Son Exceeds Marginal
  Cost (?gtA)
• Have 3rd Child if Value of Natural or Augmented
  chance of having a son exceeds the fine.
• Implication Those who wont abort more likely
  to stop.
• Abort 2nd Girl to Avoid a 3rd Child! Fine is
  expensive.
• Simple Case For mothers who know they will
  abort eventually, the decision is Now or
  Later.
• When the (3rd Child Fine gt 49 of Abortion
  cost),
• abort the second child.

32
Section 3Empirical Calibration of the Model
33
(No Transcript)
34
(No Transcript)
35
Policy Simulations

• Q What if you could reduce ? by subsidizing
  daughters? How much would that cost?
• A A lot. But as I will show, it will accomplish
  the dual objective of lowering fertility and
  reducing the sex ratio.

36
Lower Female Deficit
Declining Efficiency
Indirect cost of Policy
Direct cost of Policy
Falling Fertility
37
Key Lessons

• Cautionary tale of policy with unanticipated
  consequences
• This problem is around the horizon in India. Fix
  it now.
• Only way to address dual concern of fertility
  rates and sex ratio is by reducing the demand for
  sons.

38
THE END
39
Acknowledgements

• Professors Ron Lee, David Card, Ken Chay,
  Michael Greenstone, Martha Bailey, Raj Chetty,
  Emmanuel Saez, Jerome Adda, Kenneth Train, Bill
  Lavely, Susan Greenhalgh, Wang Feng, David Romer,
  Ken Wachter
• Students Damon Jones, Kevin Stange, Claudia
  Sitgraves, Ethan Jennings, Sanny Liao, Danzhen You

40
Stop
Decision 1
Have 1st kid
G
G
Have a 3rd Child if .51? F2 EMAX(V4) gt 0
Girl
Boy
V 0
V1 ? F1 V2 ? F1 - A
GB
G(G)
Decision 2
Abort
Abort if ? A gt EMAX(V3)
Carry to Term
Stop
GG
GG
V1 F1
Decision 3
Girl
Boy
Have 2nd kid
V1 ? F1 F2 V2 ? F1 F2 A
GGB
GG(G)

Decision 4
Abort
Abort if ? A gt 0
GGG
Carry to Term
V1 F1 F2
41
(No Transcript)