Paper Example. Impact of One-Child Policy on Labor Market

During the twentieth century, China officials identified the control of the population to play a significant impact in reforming the economy. According to the post-Mao governance, they believed that the managing population in China was a substantial method of guaranteeing growth per capita income hence leading in the enacting of the one-child strategy. The establishment of the one-child policy became the appropriate family planning in managing the China population. The government introduced this policy to assist in the elimination of environmental, economic, and social problems. There has existed a decline in China’s fertility rate of 1.67 percent of children in every woman who had attained the childbearing age (Settles et al., 2013). Also, during this period, there were approximately 39,955.1 billion Chinese Yuan aggregate household savings; hence this amount was nearly 1,000 times before adopting the one-child policy in China (Settles et al., 2013). Therefore, the one-child system has led to impacts on the labor markets in China.

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Labor Supply

The family planning strategies in China led to a fertility decline. Standard models of economic forecast a negative impact of pregnancy on feminine labor supply (Liao, 2013). Due to the availability of jobs in the market, firms could employ individuals who could accept the lowest wages hence resulting in cheap labor. The policy led to a decline in the number of new personnel and young migrants entering the labor force. It also occurred at the end of the era and was connected with the supply of cheap and young Chinese labor with no disruption. Hence a firm could no longer be capable of relying on the cheap labor supply by the Chinese, thus choosing to operate their businesses in different countries else to create more money. Ending firm ties with China will undoubtedly destruct the economy of China, therefore, modifying the state of the economy in the globe. Family planning policies may not result in the rise of GDP by indorsing labor supply.

Human Capital Investment

The decline in the children’s quantity will encourage more allocation of resources to every child leading to the increase of average kid quality. China’s family planning strategies minimize the number of children and hence may encourage more investment in human capital, which plays a primary role in the nation’s productivity. There exist a substantial trade-off between quality and the number of children in China (Liu, 2014). The imbalance of sex ratio encouraged by the policy of one-child can enhance entrepreneurship. An increase in sex ratio reinforces competition in the marriage market and, thus, stimulates parents to pursue methods to obtain more wealth. Participating in riskier actions, for example, entrepreneurial performances are one of the approaches to attain the goal. Therefore, the imbalance of sex ratio encourages China’s entrepreneurship. Besides, the dramatic decrease in the total fertility rate has led to the reduced numbers of individuals newly joining the workforce (Lucas, 2015). Also, the imbalanced sex ratio intensifies the home production shadow wage. For instance, the male-biased sex ratio may reduce female participation in the labor force. The working-age population in China resulted in a diminishing labor force growth leading to labor scarcities and thus augmented wages.

Productivity in the Labor Market

Although the population of China has continuously been developing over the previous decades, the one-child policy has led to a decline in the population growth rate. The slow pace of population growth is primarily a result of the remarkable fertility decline. China’s fertility decrease has stressed the significance of family planning strategies while concurrently recognizing the influence of cultural aspects and socioeconomic development. The shift in demographics is unexpected and generates severe problems for the nation’s economic growth. The Economists anticipated an annual GDP decline growth rate by 7.3 per cent in 2014 and approximately 6.1 per cent in 2020 due to the direct effect of the one-child policy in the nation (Liao,2013). For example, there exist three main forces that drive the projected GDP growth in China, such as labor, capital, and overall factor productivity.

Subsequently, numerous firms, especially factories, are sacking ageing personnel, particularly the lowly paid individuals, as they are seen to be driving up expenses. For the businesses to survive, they are focusing on training young individuals, which is a challenging task since the young target easier jobs, specifically in supermarkets and restaurants. The growth of China will steadily slow down since only a few young individuals are sustaining the advancement of factories. Besides, the number of pensioners is advancing at a higher rate to assist in maintaining the market. Demographers demand that firms, policymakers, and financial markets cannot comprehend that demographic certainties are leading to slowed development in the future. The one-child policy in China has influenced these significant aspects since it has radically decreased the labor supply and working-age population. Thus, as the community develops, healthy substitutes non-exist, resulting in the reduction of overall factor productivity.

Technology

Due to the decline in population, China has adopted technologies to aid them in decreasing the labor force in production. The technology has helped in making more production than using the labor force. China’s status as an economic expert is a result of several aspects such as markets, technology, capital, and the accessibility of cheap labor. Both capital and technology were attained through external investment, but the export market advanced due to the necessity for foreign clients such as the United States. The adoption of technology in China’s free-market reforms, aided the country to become an economic giant in the world. Still, the industrial achievement of China through young, cheap, and productive labor plays a vital role in the success of labor markets. Cheap labor was significant to China’s economic strength since numerous firms located in the nation intended to increase their profits while reducing their expenses. The advancement of China as an industrial giant extensively links with its technology development due to the workforce decline.

Conclusion

The one-child policy was adopted to address China’s population growth rate, which the government regarded it as too high to sustain the economy. It has had a substantial impact on the development of the labor force in the nation. The policy substantially restricted population growth; however, there is no consent on the magnitude. Also, China’s one-child policy has minimized the population of the country. It has generated a gender imbalance due to the educational and wage gaps between males and females in the labor market. As such, China’s population is aging making the older people unfit to operate in factories. Besides, the current labor force in the nation seeks more manageable tasks, especially in supermarkets and restaurants. Therefore, it is true that China’s one-child policy has resulted in a minimized labor force in the nation, leading to a reduction in economic performance, particularly in the labor market.

References

Liao, Pei-Ju. (2013). The One-Child Policy: A Macroeconomic Analysis. https://doi.org/10.1016/j.jdeveco.2012.09.001Liu, H. (2014). The quality-quantity trade-off: evidence from the relaxation of China’s one-child policy. DOI: 10.1007/s00148-013-0478-4

Lucas Jr, R. E. (2015). Human capital and growth. doi:10.1257/aer.p20151065.

Settles, B. H., Sheng, X., Zang, Y., & Zhao, J. (2013). The one-child policy and its impact on Chinese families. DOI: 10.1007/978-1-4614-0266-4_38