Abstract: This paper investigates the effect of the reduction in the young cohort size caused by Chinese family planning policies on the educational upgrading among older cohorts born before the policies. I show that family planning polices reduce the size of the young cohort and increase their educational levels. Through imperfect substitutability of workers with the same education but different ages, the incentives for older adults to acquire more education increase. Empirically, I examine the changes in the size of the young cohort aged 16-24 caused by the family planning policies initiated in 1964 with both geographical and temporal variation. I find heterogeneous effects on the educational upgrading of older cohorts. A one percent decrease in the young cohort size increases the number of college graduates aged 25-49 by 70-100 persons within a birth cohort during 1982-1990, which is about 1.4-2 percent of the national average number of college graduates in 1982. The effect is smaller for the age group 35-39 than for other age groups. The decrease in the young cohort size does not have a significant effect on the number of college graduates during 1990-2000. I further show that the observed increase in adult college graduates is mostly driven by upgrading from non-college graduates who have already been in the local labor markets. As regards the migration of non-college graduates in response to the changes in the young cohort size, I find no significant effect of the young cohort size on the number of noncollege graduates for older cohorts, meaning the non-college migrants will replace the reduction in local non-college graduates who upgrade their educational levels.
