The impact of income inequality on the fertility intention: A micro perspective based on relative deprivation

Abstract

The relative deprivation index can reflect the income inequality faced by different individuals, which is helpful to understand the relationship between income inequality and the variability of fertility intentions. But previous studies have almost focused on the macro indicators of income inequality, ignoring individual heterogeneity in income inequality. In this study, we explore the causal relationship and potential mechanisms between income inequality and fertility intentions from the perspective of relative deprivation in income. The findings are as follows: (1) An increase in income inequality boosts individuals’ fertility intentions, and the results are still robust after using the instrumental variables two-stage least squares (2SLS) model to deal with endogeneity. (2) Mechanism analysis reveals that income inequality improves individuals’ fertility intentions through the channels of “Build hopes on children”, “Allocate more time to families” and “Put less value on children’s education”. (3) Heterogeneity analysis indicates that income inequality has a more pronounced positive impact on fertility intentions of individuals with poor education, low household assets and without pension insurance. (4) Further analysis reveals that an increase in income inequality at macro level also promote individuals’ fertility intentions. Our findings hold significant policy implications for promoting a rebound in fertility rates. When developing policies to adjust income distribution, it is necessary to consider the response of individuals’ fertility decisions to income inequality. Policymakers should ensure that efforts to improve income distribution do not inadvertently reduce the willingness of individuals to have more children.