The impact of China’s “Double Reduction” policy on the fertility and education investment behaviour of Chinese households

The ‘Double Reduction’ policy, implemented in 2021, regulates academic shadow education at the compulsory education level in China. This study bridges research gaps by analysing the impact of the ‘Double Reduction’ policy on the fertility and education investment behaviours of Chinese households. First, we propose a heterogeneous agent model with endogenous fertility and private education investment and incorporate China’s unique mechanism for admitting urban and rural students separately in the high school entrance examination. Second, we propose a feasible and simple new algorithm, the DeepHAM+DIRECT algorithm, to provide an efficient tool for the multi-parameter joint calibration of complex heterogeneous agent models. Third, we provide a quantitative assessment of the possible effects of the ‘Double Reduction’ policy for the first time. The quantitative simulations show that effective regulation of shadow education can boost fertility and reduce parents’ burdens, with efficacy escalating proportionally to regulatory stringency.