We examine the tradeoff between fertility and entrepreneurship using China’s twochild

policy. Households exposed to the reform were more likely to have additional

children but less likely to engage in entrepreneurial activity. This tradeoff is driven

by heightened effective risk aversion: childbirth raises subsistence needs and amplifies

sensitivity to income volatility, discouraging risky occupational choices. The effect

is stronger among households with only daughters, higher consumption requirements,

tighter financial constraints, greater income volatility, and weaker intra-household risk

sharing. Our findings highlight how household characteristics factor in the effectiveness

of pro-natalist policies.