Gender ratio under China's two-child policy

China's one-child policy has often been criticized for exacerbating its gender imbalance. Although such criticism implies that the gender imbalance should improve significantly once the one-child policy is removed, experiences of other countries with similar gender imbalance and no mandated fertility limit suggest that this conclusion should not be accepted without closer examination. Consequently, this paper examines the effects of allowing parents to have two children on the gender ratio. Specifically, we build a model of parental decision-making, in which parents choose between letting nature decide the gender of their child and manipulating the birth process to increase the likelihood of obtaining a son, and identify the optimal behaviors in this framework, We investigate the equilibrium level of gender imbalance under both the one-child and the two-child policy settings and show through a series of examples that the gender imbalance need not improve under the two-child policy. (C) 2015 Elsevier BM All rights reserved.