Research Project

Financial Incentives and the Fertility-Sex Ratio Trade-off

Investigator: CDEP Fellow S Anukriti

In the last few decades, several Asian countries, most notably India and China, have experienced a rapid increase in the male-female sex ratio. This trend has generated considerable policy and academic interest in the potential effects of these sex-imbalances, as well as interventions aimed at reducing them. Along with reducing the sex ratio, policymakers in these countries also want to lower fertility. However, son preference makes these two objectives conflicting. This paper examines if this conflict can be resolved by financial incentives. Specifically, it examines the effects of an Indian monetary incentives scheme, Devirupak, that provides couples with substantial cash transfers to promote a one-child norm and to lower the sex ratio. The paper finds that Devirupak lowers fertility but, despite higher incentives for girls, worsens the overall sex ratio of first and second births. Only poor and low son preference households exhibit an increase in the likelihood of having only one daughter (and no sons). Thus, in a setting with a strong preference for sons and easy access to sex-selection technology, even reasonably large financial incentives may, at best, have a limited role to play in the resolution of the fertility-sex ratio conflict, and at worst, can have unintended consequences for sex-imbalances when lower fertility is jointly targeted.