The historical one-child policy in China, which aimed to control population expansion, inadvertently had an economic effect: it greatly enhanced female entrepreneurship, according to a new investigation from the University of Michigan.
The findings indicate that a stricter application of fertility regulations resulted in an increase in the number of women starting their own businesses. Although earlier studies have established a correlation between lower fertility rates and women entering the workforce, the U-M analysis enriches existing literature by revealing an unexpected economic consequence of one of the globe’s most debated population control measures.
Utilizing data from the China Health and Nutrition Survey alongside the Chinese business registry, the study revealed a rise in female entrepreneurship by 3.8 percentage points—a 40.9% increase compared to the average rate of 9.3%—following the implementation of stricter monetary penalties for having more children in certain provinces. The surge in female entrepreneurship was particularly evident among women of reproductive age (20-40 years), those with children, and urban inhabitants.
“The findings illustrate that as fertility-related penalties constrained family sizes, many women directed their time and efforts into entrepreneurship,” stated co-author Jagadeesh Sivadasan, a professor specializing in business economics and public policy at the Ross School of Business at U-M.
The analysis found that each additional child imposed an extra childcare burden on women of approximately 9.17 hours each week, while their household responsibilities increased by 4.36 hours weekly. This effect was significantly more pronounced for women than for men, underscoring the notion that family duties disproportionately limited women’s professional choices.
By capping the number of children a family could have, the one-child policy, or OCP, effectively created extra time for women, empowering them to re-enter the workforce, pursue career advancements, or establish enterprises. The findings indicate that the time conserved from having fewer children was a substantial catalyst for female entrepreneurship.
Furthermore, the study indicated no evidence to substantiate the worries that women might be “hesitant entrepreneurs” compelled to initiate businesses due to a lack of job prospects, nor that entrepreneurship merely acts as a temporary phase before seeking external employment.
On the contrary, the results imply that women who shifted to self-employment had greater personal and household income and expenditure levels than those transitioning to outside employment. This indicates that the businesses founded by women were financially sustainable rather than simply a fallback option.
Moreover, the research established that the caliber of businesses founded by women due to OCP was no different from other startups. Women who ventured into entrepreneurship following fertility limitations were equally as likely to register their businesses, which reflects a sign of high-quality enterprises. Notably, the survival rates of these firms were on par with other women-owned businesses, affirming that these were not inferior or fleeting endeavors, but instead legitimate and sustainable operations.
“The findings suggest that, unlike certain other developing nations, female entrepreneurship prompted by fertility fines in China did not act as a second-best alternative to external employment, but rather provided a financially viable option for women,” Sivadasan asserted.
The study also discovered that the impact was most pronounced in urban regions, where the OCP was enforced more rigorously, and among educated women who may have viewed entrepreneurship as a strategic career move. In contrast, rural women, who often had the allowance to have a second child if their firstborn was a girl, did not witness the same rise in entrepreneurship.
This research adds to ongoing discussions about how fertility policies shape labor markets and economic development. Although the OCP was officially rescinded in 2015, its enduring economic implications continue to be studied.
“This investigation emphasizes a significant yet frequently overlooked consequence of stringent fertility regulations,” Sivadasan remarked. “As nations globally contend with demographic changes, the potential favorable impact on female entrepreneurship and labor force participation could assist in alleviating the economic challenges posed by declining fertility rates.”
Nevertheless, the authors remind that their analysis does not evaluate the comprehensive impact of the one-child policy, but rather identifies one economic advantage of the policy. As China presently faces low birth rates and a diminishing workforce, the unintended consequences of the OCP—including its influence on female entrepreneurship—may provide crucial insights for policymakers worldwide.