India is the world’s second most populous country, and home to a third of the world’s poorest 1.2 billion people. Fertility reduction has, therefore, always been a priority for Indian policymakers. With this in mind, starting with Rajasthan in 1992, 11 Indian states imposed a two-child limit that prevents people with more than two children from contesting panchayat elections at the village, block and district levels. Four of these states (Haryana, Himachal Pradesh, Madhya Pradesh and Chhattisgarh) eventually repealed the law in 2005-06, but it remains in effect in the other seven states (Rajasthan, Andhra Pradesh, Odisha, Maharashtra, Uttarakhand, Gujarat and Bihar).

In all these states, a one-year grace period was allowed after the announcement of the law, during which households could have additional children and still remain eligible for panchayat elections. However, for households with two or more children by the end of the grace period, having another child thereafter led to disqualification. Families with less than two children by the end of the grace period were similarly limited to a maximum of two children afterwards to remain eligible.

The two-child limit affects a large number of citizens. The seven states we study, where the limit was active during 1992-2006, had a total of 912,597 seats across all three tiers of the panchayat system in 2004. Assuming three prospective candidates per seat, and 30% of state population of childbearing age (about 102 million people), as much as 2.7% of the childbearing population in these states was directly affected by the norm. Thus, an analysis of this law is extremely relevant from a policy perspective.

We compare fertility outcomes for women from treatment states (where the law has been enacted in the past) before and after the announcement of the law, relative to similar women in control states (where the law was never enacted), over the period 1973-2006. We find that women in treatment states with two children prior to the announcement of the law are 6.25% less likely to have a third child after it was announced, relative to the baseline probability of 8%. However, this decline is not uniform across all post-announcement years. During the grace period, we observe a substantial 17.9 percentage point increase in the likelihood of more than two births, which then declines in subsequent years. This pattern suggests that households are adjusting fertility to take advantage of the exempt period, while remaining eligible for future elections.

Fertility decline in India and other developing countries with a high societal preference for sons over daughters has been shown to make the sex ratio more male-biased. We, therefore, also investigate if the two-child limit induces any changes in the sex-selection behaviour of households. This effect is likely to be stronger for families with a stronger preference for sons (upper castes) and those for whom the constraint is more binding (families who can only have one more child after the law is announced). Indeed, we find that second births in upper-caste households with first-born daughters (relative to those with a first-born son) in treatment states are 3.07 percentage points more likely to be male due to the limit. This represents a more than fourfold increase in the likelihood of a male second birth amongst these families. There is, however, no visible change in the sex ratio of second births among lower-caste families, or in upper-caste families that already had a boy when the law was announced.

The stated rationale for the two-child limit is that it will lower fertility via a role-model effect, as citizens in the constituency will emulate their panchayat leaders. It is reasonable to expect that such an effect would require a period of time to materialize—people would have to observe their leaders, notice their smaller family size (and sex-selective behaviour), and then change their own fertility decisions. Given that it usually takes nine months to have a child, we would expect at least a year or two to pass before fertility declines visibly. Our results, however, show an immediate increase in fertility during the grace period, and then a decline. This pattern cannot be explained by a role-model effect.

A mechanism that more plausibly explains our findings is aspirations for local leadership positions. The pattern of the fertility effect and the speed at which it occurs is potentially because people wish to be eligible for elections themselves, rather than their learning from already elected role models. Our finding that the effects are stronger for the more politically dominant upper-caste households further supports the aspirations channel.

To our knowledge, this is the first instance where a restriction on potential access to political power has had such a profound demographic impact in a large developing country. Our results imply that Indian citizens strongly aspire to affect change in their lives by holding political office. Consequently, policies that alter incentives for access to local leadership positions can be promising avenues for social change. Unfortunately, however, the adverse effects on sex ratios also show that policy initiatives should be designed with gender implications in mind so as to prevent unintended consequences such as the ones we have outlined.

S. Anukriti is an assistant professor in the economics department at Boston College. Abhishek Chakravarty is assistant professor of economics at the University of Essex.

Published with permission from Ideas for India, an economics and policy portal.

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