A case for “reverse one-child" policies in East Asia? Examining the link between education costs and lowest-low fertility

Household spending on education is exceptionally high in East Asia, including Japan, Singapore, South Korea and Taiwan, and has been cited as a cause of low fertility. This observation is sometimes attributed to a cultural emphasis on education in East Asia. In this paper, we present evidence that institutional factors, namely university admissions policies, play an important role in reinforcing pressures on parents to invest in their children’s education. This, in turn, leads to higher costs of childbearing and lower fertility. Using data from the 2005-2007 REFLEX survey, we present quantitative evidence that graduating from a prestigious university is associated with much higher labor market premiums in Japan than in two other countries with very low fertility, Italy and Spain, and corroborating evidence suggesting that the higher premiums are at least in part generated through causal pathways. We model the impact of the higher premiums on investment in education and fertility using a quantity-quality model. Finally, we offer a novel set of “reverse one-child” policies that directly address the unintended consequences of this education-job institutional nexus for East Asian fertility. The policies have the additional virtues of having very low fiscal requirements and reducing social inequality.