A new study from the University of Michigan finds that the one-child policy aimed at controlling China's population growth has unexpectedly increased female entrepreneurship rates. The study shows that strict fertility restrictions have prompted more and more women to embark on the entrepreneurial path. Previous research has found that declining fertility rates are associated with women entering the labor force, but this study sheds light on the unintended economic impacts of controversial population policies around the world.
Decreased parenting time a major driver
By analyzing data from the "China Health and Nutrition Survey" and Chinese business registration data, researchers found that when provinces introduced stricter fines for having more children, the female entrepreneurship rate increased by 3.8 percentage points, an increase of 40.9% compared to the average level of 9.3%. This increase is particularly significant among women of childbearing age (20-40 years old), women with children, and urban residents.
"The findings suggest that when fertility penalties limit family size, many women invest time and energy into entrepreneurship," said Jagadeesh Sivadasan, a co-author of the study and a professor at the University of Michigan's Ross School of Business.
Research shows that for each additional child a woman has to spend an average of 9.17 more hours of childcare per week, and her housework burden also increases by 4.36 hours. This effect is much greater for women than for men, further evidence that family responsibilities limit women's career choices to a large extent. By reducing the number of children per family, the one-child policy frees up women's time, allowing them to re-enter the workforce, pursue careers or start businesses. The findings indicate that one of the main drivers of female entrepreneurship is a decrease in childcare time.
Female entrepreneurship is not a quick fix
In addition, the study found no evidence that women's entrepreneurship is a "forced choice" due to a lack of employment opportunities, and there is no evidence that entrepreneurship is only a transitional stage before women find a job. On the contrary, research shows that women and their families who choose to start a business experience higher levels of income and expenses than those who enter traditional employment. This shows that female entrepreneurship is not a quick fix but an economically viable career option.
The study also found that the quality of female entrepreneurship promoted by the one-child policy is not inferior to that of other start-up companies. These women-founded businesses are often incorporated (Levine and Rubinstein’s research shows that median hourly wages are about 80% higher in incorporated businesses than in unincorporated businesses), indicating that they are high-quality businesses. Additionally, the survival rates of these businesses are comparable to other women-owned startups, further proving that they are not low-quality or short-lived businesses, but sustainable and legitimate businesses.
"The research results show that, unlike the situation in some developing countries, female entrepreneurship in China prompted by childbirth fines is not a 'second-best option' in the job market, but an economically viable career path," Sivadasan said.
The effect is more obvious in cities than in rural areas
The study also found that this effect is most pronounced in urban areas, where the one-child policy is more strictly enforced, and is more prominent among highly educated women, who may view entrepreneurship as a strategic option for career transition. In rural areas, because some families can have another child after the first child is a girl, the growth trend of female entrepreneurship is not obvious.
This study provides a new perspective on the discussion of how fertility policies affect labor markets and economic growth. Although China officially abolished its one-child policy in 2015, the long-term economic impact of the policy continues.
"This study reveals an important but easily overlooked consequence of strict fertility policies," Sivadasan said. "As many countries around the world face demographic changes, the potential positive impact of declining fertility rates on female entrepreneurship and labor force participation may help alleviate the economic challenges posed by population decline."
However, the researchers also emphasized that the study did not evaluate the overall impact of the one-child policy, but only pointed out an economic effect it brought. At a time when China is facing low fertility rates and a shrinking labor force, the unintended effects of the one-child policy—including its boost to female entrepreneurship—could provide lessons for global policymakers.