Negative Effects Of One Child Policy

2.2 Negative Impacts of the One-Child Policy on the Economy The implementation of the OCP led to many problems that directly affected and are still affecting China’s economy. One of the biggest problems is the shortage of labour supply, in future generations, caused by the low fertility rate. Before making the OCP an actual policy, the fertility rate in China was about five children per female; today, the rate is below the national average of 1.7 children per female (Eberstadt, 2007). The low fertility rate poses a concern for the supply of labour in the market. Graph 1 shows that a decrease in labour supply leads to rapid unemployment, price increases and a decrease in GDP. The long-run aggregate supply curve shifts to the left because …show more content…
In other words, China is becoming an “aging population” as seen in graph 3. The population of children aged 0-14 is decreasing rapidly while the population of elderly people age 65 and above is increasing steadily. This is the second negative impact the OCP poses. According to Ehrlich (cited in Bloom el al.’s (2001) paper), an aging population can lead to the “death of millions of people.” Bloom et al. (2001) continue to state that an economy with a “large cohorts of… elderly is likely to experience slower growth than one with a high proportion of working-age-people.” Older people tend to work and save less, and, therefore, they contribute less to economic growth. Furthermore, even if the older generation wants to and can work, they may not be as productive as the younger generation. Graph 4 shows the percent change in the total labour force is decreasing. The facts that fewer children are born each year, older people are population China more, and percent change in the total labour force is decreasing suggests productivity will also decrease. Li et al. (2012) mention that economic growth is dependent on both wage growth rate and productivity rate. If wage growth rate is increasing when productivity rate falls, labour costs increases and economic growth slows down. As mentioned earlier, the OCP causes wage to increase rapidly while decreasing productivity. This means that labour costs will also …show more content…
In their article “Do High Birth Rates Hamper Economic Growth?” they reiterate the fact that OCP was indeed effective in lowering birth rates. However, they did not agree with the fact that low birth rates led to lower economic growth. Instead, their research proved that the OCP was one of the contributors “to the rapid growth of the Chinese economy.” Moreover, Bloom et al. (2011) contradict Ehrlich’s statement by showing that population aging does not hamper economic growth, but instead helped the economy grow father. For example, between 1960 and 1999, the global population increase from 3 billion people to 6 billion people, but the income per capita tripled instead. This further emphasizes that an increased in aged population did not lag economic growth, but instead helped it. Overall, although all researchers agreed on the point that the OCP was effective in lower fertility rates, researchers like Li, Zhang (2007) and Bloom et al. (2010) contradict some of the argument pessimistic OCP researchers had by proving that population control can indeed contribute to positive economic growth. However, the negative effects of the OCP still triumph over the positive. The concern that continuation of the OCP will lead to further decrease in GDP ultimately led to the relaxation of the