Working Paper: CEPR ID: DP16864
Authors: Venkataraman Bhaskar; Wenchao Li; Junjian Yi
Abstract: We analyze a model of multidimensional parental investments under imperfect marital commitment. Parents choose to invest in their child's human capital and in housing, which is a public good within marriage. If men are in excess supply in the marriage market, but also enjoy greater bargaining power within marriage, their parents will overinvest in housing to credibly commit to share more resources with potential wives. This may crowd out human capital investment. To test the theory, we use nationally representative Chinese household survey data to examine the effect of a more male-biased local sex ratio upon investments in boys, relative to investments in girls.Parents with boys increase labor supply and migrate more to improve earnings and investments. They increase housing investment while reduce educational investments.
Keywords: premarital investment; imperfect commitment; sex-ratio imbalances; public goods; human capital investment; human capital development
JEL Codes: J12; J13; J16; J18; J24; D10; O15; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in local sex ratio (J19) | increase in labor supply (J20) |
| increase in local sex ratio (J19) | increase in migration (F22) |
| increase in local sex ratio (J19) | increase in housing investments (R21) |
| increase in local sex ratio (J19) | decrease in educational expenditures (H52) |
| increase in local sex ratio (J19) | shift in investment behavior towards housing (G51) |
| increase in local sex ratio (J19) | decrease in investment in education (I21) |