Working Paper: NBER ID: w15093
Authors: Shangjin Wei; Xiaobo Zhang
Abstract: The high and rising household savings rate in China is not easily reconciled with the traditional explanations that emphasize life cycle factors, the precautionary saving motive, financial development, or habit formation. This paper proposes a new competitive saving motive: As the sex ratio rises, Chinese parents with a son raise their savings in a competitive manner in order to improve their son's relative attractiveness for marriage. The pressure on savings spills over to other households. Both cross-regional and household-level evidence supports this hypothesis. This factor can potentially account for about half of the actual increase in the household savings rate during 1990-2007.
Keywords: savings; sex ratio; China; household behavior; marriage market
JEL Codes: D1; F3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| local sex ratio (J79) | household savings rates (D14) |
| families with sons (J12) | household savings rates (D14) |
| local sex ratio (J79) | competitive saving behavior (D14) |
| competitive saving behavior (D14) | household savings rates (D14) |
| local sex ratio (J79) | families with daughters savings rates (D14) |