Many policy makers in developing countries see restricting family size
as a good strategy for increasing average human capital investment. This
belief is consistent with the observed negative correlation between quantity
and quality of children both across countries and across households
within countries. However, because parents simultaneously choose the
quantity and quality of their children, the observed correlation may re-
flect parental preferences rather than the causal relationship of quantity
on quality. In addition, the decision to have a second child may be positively
correlated with the quality of the first child. This paper exploits
exogenous changes in family size caused by relaxations in China’s One
Child Policy to estimate the effect of family size on school enrollment.
Specifically, it uses the relaxation that allows a rural household to have a
second child if the first is a girl. First, it shows that the "1-son-2-child"
rule increased family size for first born girls. Second, it uses the exogenous
increase in family size to find that an additional sibling significantly
increases school enrollment of the first child. Furthermore, this paper
shows that the One Child Policy dramatically increased sex-imbalance in
certain areas.