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Fertility and Savings: The Effect of China’s Two-Child Policy on Household Savings


China’s high household savings rate has attracted great academic interest but remains a puzzle. Potential explanations include demographic, policy, and financial causes. Yet a lack of reliable microlevel data on household finances makes it difficult to assess the relative importance of each factor. This paper uses individual income and spending transactions linked to demographic characteristics and financial information on loan applications and credit availability from a large Chinese bank in Inner Mongolia. We match a large subset of bank customers to administrative records covering marriage and births and obtain a unique view into consumption and saving patterns around important life events. Our results point toward identifying income growth, financial instability, and credit access, rather than such directives as the one-child policy, as the primary causes of high levels of savings among Chinese households.


Working Paper


Scott Baker, Efraim Benmelech, Zhishu Yang, Qi Jacky Zhang

Date Published



Baker, Scott, Efraim Benmelech, Zhishu Yang, and Qi Jacky Zhang. 2023. Fertility and Savings: The Effect of China’s Two-Child Policy on Household Savings.


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