Question

From 1979 to 2015 , China had a policy that allowed couples to have only one child. (Since 2016 , couples have been allowed to have two children.) The one- child policy caused a change in the demographics of China. Between 1980 and 2015 , the share of the population aged 14 and under decreased from 36 percent to 17 percent. And, as parents attempted to ensure that the lone child was a son, the number of male children relative to female children increased. Choose three goods and explain how the demand for them has been affected by China's one-child policy. Sources: World Bank, World Development Indicators, April 2016; and "China New 'Two Child' Policy Increases Births by 7.9 Percent, Government Says," cbsnews.com, January 23, 2017 .

Short answer

Overall, China's one-child policy might have led to a decrease in demand for children's items like clothing and toys, but a possible increase in demand for high-quality education services. Additionally, a skew towards male births could have influenced demand patterns within these categories, leading to a higher demand for boys' clothing and toys, or educational services targeted towards male children.

Step-by-step solution

Identify the demographics changes

From 1979 to 2015, China's one-child policy resulted in two significant demographic shifts: a decrease in the population under 14 from 36% to 17%, and an increase in the number of male children relative to female children.

Choose relevant goods

Typically, some goods are more popular among certain age groups or genders. To think about how the demand might have changed, we'll select three goods which are primarily consumed by children or show a significant difference in consumption patterns between genders. For this explanation, we'll choose the following goods: children's clothing, toys, and education services.

Analyze the impact on children's clothing

With a decrease in the child population, the demand for children's clothing is likely to have decreased over this time period. Additionally, with more boys being born than girls, there might be a higher demand for boys' clothing compared to girls' clothing.

Analyze the impact on toys

A similar analysis applies to toys: the overall demand for children's toys would likely have decreased. Also, traditionally 'boy' toys may see a higher demand given the skewed gender ratio.

Analyze the impact on education services

With fewer children to invest in, Chinese parents may have been willing to spend more on the education per child, potentially raising the demand for high-quality educational services, private tutoring, and extra-curricular activities. A gender bias towards male children could also influence the types of educational services in demand.

Key concepts

Demographic Changes

China's one-child policy introduced in 1979, aimed to control the rapid population growth. However, it significantly altered the country's demographic structure. The most evident change was in the age distribution. The proportion of children aged 14 and under dramatically dropped from 36% to 17%.
This shift reduced the young population, impacting various sectors reliant on youthful demographics. Another major demographic change was the skew in the gender ratio. Many families preferred having sons, resulting in more males being born than females. This preference affected social structures and future workforce compositions, ultimately shaping China's demographic landscape for decades.

Demand for Goods

The demographic changes brought about by the one-child policy influenced consumer demand considerably. The reduction in the number of children led to less demand for children's products such as clothing and toys.
Meanwhile, the gender ratio imbalance meant a noticeable shift in preferences for specific goods. Products typically favored for boys, such as sports equipment or certain types of toys, likely saw stable or increased demand. Conversely, demand for goods primarily targeted towards girls might have diminished. This shift in demand was not just limited to direct consumer goods but also impacted markets supplying raw materials and related industries.

Education Services

With fewer children per family, parents in China were in a better position to allocate more resources to their child's education. This likely increased the demand for high-quality education services.
Parents may have been more willing to invest in private tutoring, supplemental educational programs, and extracurricular activities. Furthermore, the preference for sons could have meant more investment in educational resources for boys, perceived as future breadwinners. This emphasis on education reflects a broader societal focus on ensuring that the only child—often a boy—succeeded in a competitive environment.

Gender Ratio

China's preference for male children under the one-child policy led to a significant skew in the gender ratio. A cultural bias favored sons, often seen as the continuers of the family line.
Over time, this resulted in a heightened number of men compared to women in the population. The impacts of this duplication were profound, manifesting in societal pressures such as increased competition for marriage and a subsequent impact on social stability. The gender imbalance has led to long-term socio-economic challenges that China continues to reckon with.

Economic Impact

The economic consequences of China's one-child policy were multifaceted. With fewer children, households had more disposable income per child which could lead to increased spending in specific sectors like education.
However, the reduced birth rate also meant a smaller labor force entering the market over time. This labor shortage could potentially hinder economic growth, as fewer young people enter the workforce. Moreover, the gender imbalance could influence economic dynamics, affecting sectors ranging from consumer goods to social services, as the market adapts to a predominantly male consumer base and a shrinking workforce.