Tuesday, October 8, 2013

Family Planning And High Income Households

When it comes to investing in children, quality and quantity matter (abstract):

Fifty Years of Family Planning: New Evidence on the Long-Run Effects of Increasing Access to Contraception
Martha J. Bailey

This paper assembles new evidence on some of the longer-term consequences of U.S. family planning policies, defined in this paper as those increasing legal or financial access to modern contraceptives. The analysis leverages two large policy changes that occurred during the 1960s and 1970s: first, the interaction of the birth control pill’s introduction with Comstock-era restrictions on the sale of contraceptives and the repeal of these laws after Griswold v. Connecticut in 1965; and second, the expansion of federal funding for local family planning programs from 1964 to 1973. Building on previous research that demonstrates both policies’ effects on fertility rates, I find suggestive evidence that individuals’ access to contraceptives increased their children’s college completion, labor force participation, wages, and family incomes decades later.

One of the lesser known characteristics of the Asian Tiger economies is that they generally started supporting family planning policies in the 1970s. Malaysia by contrast went the other way – after complete neglect of the link between family size and economic welfare until the 1980s, we ended up implementing a policy to increase the population to 70 million.

While the goal of creating a larger market of both consumers and workers might have made some sense (I’m doubtful), what the policy helped create was a delay in Malaysia’s demographic transition – that boost to growth that comes from a higher portion of the population in the workforce. The Tigers have demographic age profiles that look like other high income economies. Malaysia’s looks like a low income economy just about to start on development.

In addition, economic theory and the empirical evidence, such as laid out in the paper above, tells us that more children in the presence of budget constraints means that each child in a family receives less parental investment in both quality and quantity. That has enormous repercussions down the road, even if the education system was up to mark, as life outcomes depend crucially on the very early years of a person’s life.

Moreover, those with larger families tended to also be among the poor and in rural communities, which acts as a barrier for social and economic mobility, thus exacerbating income and wealth inequality. The 70-million population policy essentially handicapped a whole generation of Malaysians.

While there’s not much we can or should do about the overall situation now – it’s already largely resolving itself through lower fertility rates – lower income households continue to have more than the average number of children. As a consequence, not only are they unable to afford to invest more as a family, they invest less per child.

As heretical as this might sound, we need to pass some condoms around.

Technical Notes

Martha J. Bailey, "Fifty Years of Family Planning: New Evidence on the Long-Run Effects of Increasing Access to Contraception", NBER Working Paper No. 19493, October 2013

11 comments:

  1. This is one of the reasons why Chinese is more successful than Malay. Chinese tend to have smaller family because they are worry that they do not have resources to bring up their children. They want quality rather than quantity. After all they are being discriminated in every aspect of their life (hence the higher cost of bringing up children) as compare to Malay.

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    1. I wouldn't generalise overmuch along race dimensions. Poor Chinese households are also bigger than richer Chinese households.

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    2. Chinese Sarawak Rainforests DestroyersOctober 8, 2013 at 6:54 PM

      Chinese are not more successful than Malays.
      Are you talking about Chinese in China? Because in Malaysia, its the Malays who are in control and running the country since time in memorial.
      Maybe the Chinese have stolen more than the Malays. They stole from the diesel subsidies and enabling them to buy bigger car which used more fuel and get more subsidies.
      The Chinese corrupted UMNO leaders like Mahathir who gives them license and monopolies but the Malays have kicked this Indian down. Well there are more Indians in UMNO who need to be kicked but that is another thread.
      The Chinese have managed to gather a lot of money ins Sarawak and Sabah by destroying the million years old rainforests heritage. Is that success to you? I would say successfully corrupt the Jabatan Perhutanan and the State Government. But these are crimes against rainforests which the world will hold against the Chinese.
      So if you think that having bigger car, condo is success then you are right at least for the moment before corruption charges are brought against timber and subsidies stealers or tax evaders etc.

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    3. haha, good theory. But who control the license and gave out the license to chop tree in Sarawak?

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  2. Statistically true, but which is cause and effect? Do the higher-income Chinese have fewer children because they are higher income or do they have higher income because they have fewer children?

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    1. It's not in this research, but others generally find its incomes first. And the effect is not on the household per se, but on future generations (i.e. having fewer children doesn't make you richer). The key is to beating multigenerational poverty is to maximise investment per child.

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    2. The story of past generation is always the same. The Chinese will work their butt out and put in every penny for their children education (plus their tiger moms tactic) forcing their children to excel (or kiasu). Once their children succeed in getting a better livelihood, they usually limit their family size to 1 or 2 children and pour in resources on them because they don't want to have their parent lifestyle plus with fewer children they can maintain their current lifestyle.

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    3. BMW Subsidiesed Diesel VersionOctober 8, 2013 at 7:05 PM

      There are normal poor chinese in small towns etching a living. The Chinese were poor, they were tin dulang washers.
      When they have daughters they gave them to malay families. so there in no correlation with chinese having less children and becoming rich.
      Chinese or Malays have less babies once they know they can have sexual pleasures without babies by using simple mechanisms like condom. Even school children used them.
      The riches that the Chinese enjoy now is the results of billions of Petronas subsidies given by Mahathir government.
      That is how the Chinese now have more wealth than the Malays. Even BMW is recognising this Chinese subsidy mentality by introducing BMW Subsidised Diesel version. Although diesel is carcinogen like cigarettes the temptation of diesel subsidies will entice them to BMW.
      The Chinese have higher income because they steal from petronas diesel subsidies its that simple. Petronas have given billions to fuel and gas subsidies 90% of which end up in chinese tokays pocket. Such is Mahathir sutpidity. But it is still on going now.

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  3. I read about the target population of 70million back when I was taking STPM in year 2000. Never agreed with it. IMO the optimum population should be at 40 million just like South Korea. Else Malaysia will strains the natural resources to sustain the population.

    Dzul41

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    1. Like Hisham said the policy is seeing a self correcting measure. Fertility rate in Malaysia is falling and we're set to hoover at around 40 million. I think that should be the target and focus on quality from now on.

      Adi

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  4. I have another theory, in the olden days, there is the extended family, helping to look after the young ones.

    Now moving into towns and cities, the extended family breakdowns and you are on your own to look after your own family, so naturally, small it became. And the cycle become vicious, getting smaller as one get richer with freedom to boot (no need to look after kids) even to the extend that you now have left-over girls (not married by the age of 30s) in china as well as in Malaysia.

    But indeed the benefit to the next generation indeed is beneficial with less mouth to feed, so better and more food and time to nurture.

    Zuo De

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