The Impact Of The Comprehensive Two-child Policy And The Number Of Children On The Allocation Of Household Financial Assets

The implementation of the universal two-child policy not only affected the aging process in China,but also had an impact on the family structure of millions of households in China.The existing literature has made an in-depth study on the impact of family structure,especially the number of children,on the allocation of household financial assets,but it ignores the impact of the policy and institutional environment in which households are located.Based on the existing literature,this article uses portfolio theory,life-cycle approach,background risk theory,intergenerational relationship theory,and intermediary variable theory to explore the impact of the universal two-child policy and the number of children on household asset allocation,and further clarify the influence mechanism of the policyThis article analyzed the impact of the universal two-child policy and the number of children on the allocation of household financial assets by probit and tobit models based on the data from the China Household Finance Survey(CHFS)Besides,the article also uses the number of children as an intermediary variable to further clarify the direct and indirect effects of the universal two-child policy.IV estimation and propensity value matching method(PSM)are used to solve the endogenous problems that may exist in the modelsFirst of all,the study found that the universal two-child policy and the increase in the number of children not only restrain families from participating in stock investment,but also weakened their willingness to participate in the financial market,who were reluctant to bear the risks brought by it.Even if families participate in the financial market,they will reduce the allocation ratio of financial assets as the number of children increases after the implementation of the universal two-child policySecondly,the study on the transmission mechanism of the impact of the two-child policy and the number of children on household asset allocation found that the impact of the universal two-child policy on household assets allocation has direct and indirect effects.On the one hand,the policy directly leads families to prefer risk-free assets and has a crowding-out effect on financial asset investment.On the other hand,the policy has led to an increase in the number of children,which has affected family budget constraints.Increased cost of raising child have reduced family wealth,thereby reducing household investment in financial assets.The indirect effect of the policy on the allocation of household financial assets is significant,and the number of children has a partial intermediary effect.77.41%of the impact of the policy on household financial market participation can be explained by the number of children as an intermediary variable.After considering the endogeneity of the model,it is found that the number of children and the universal two-child policy have a negative impact on household stock investment decisions,financial market participation decisions and household assets allocation ratios.It mainly reduces the holding of stocks,funds,and financial products,but has no significant effect on the holding of gold and bonds.Real estate will crowd out risky financial assets allocated by families.Finally,the article also discusses the heterogeneity of the impact of the universal two-child policy and the number of children on the allocation of household financial assets in terms of urban-rural differences,family structure differences,and wealth levels differences.For urban households,the policy-induced changes in the number of children have a significant indirect effect on the allocation of financial assets,mainly because the policy is implemented well in urban areas.For rural households,the indirect effect is insignificant since the policy does not have a significant impact on the number of children,while households'wealth level and education level are the important factors that affect rural households' participation and allocation of financial assets.Compared with the two-child family,the policy has more influence on the financial asset investment decisions of the one-child family.The number of children has different influences on the investment decisions of families with different wealth.For wealthy households,regardless of how many children they have,their participation in the stock market and financial market,and the of financial asset allocation ratio are much higher than other types of households In wealthy households,due to relatively loose family budget constraints,the number of children has a insignificant impact on family financial asset investment decisions.In summary,in order to promote the implementation of China's birth policy and improve the financial participation and allocation of residents,the following points need to be achieved:(1)Grasp the new needs of families and develop diversified financial products;(2)Establish and improve a childcare welfare system to ease the economic pressure of family parenting;(3)Improve the employment security system and increase family income;(4)Pay attention to rural education and popularize financial knowledge;(5)Stabilize housing prices and rationally allocate educational resources.