The Mythology of Two Hundred Million People: Equalitarianism, Welfare Benefits, and Population Growth

Shuo Chen, The Hong Kong University of Science and Technology
Huadong Song, Hong Kong University of Science and Technology
Jie Chen, KDB Asia Ltd.

Around 202 million additional births in rural areas increased within only two decades under Chinese People’s Commune which is characterized by egalitarianism and a high share of welfare benefits. However, the relationship between the welfare benefit and its incentive on fertility is ambiguous since the absence of plausible control group and an endogeneity problem. This paper uses the exogenous variance across counties in the timing of abolishment of People’s Commune from 1978 to 1984 as a “natural experiment” to identify the causal link. We find robust evidence that the welfare benefit matters for fertility: 2 extra births per thousand people born in rural China can be attributed to the collective commune system. In other words, institutional conditions alone accounts for about 7 percent of increased population.