Chinese Economy Class meeting 12 Monday February 24, 2014 One Child Policy II Unintended Consequences—Sex Imbalance Cameron et al. (Little Emperors) Wei and Zhang (Sex Imbalance)

Sex Imbalance and Competition in Marriage Market China’s Bachelors: The Gender Imbalance http://www.youtube.com/watch?v=tALpoXIkCKk China’s “leftover men” pose potential social challenges. Dating/matchmaking service opportunities https://www.youtube.com/watch?v=Rj8Vy1hFGbs Economics and marriage. A house is required- China Take: https://www.youtube.com/watch?v=p30UlS95_xo

Wei and Zhang. Competitive Saving Motive Their argument is, people (parents) save to improve their relative standing in (children’s) marriage market. Shouldn’t families with daughters decrease saving (which would offset the increased saving of families with sons)? Maybe yes, because they can free-ride off of husband’s saving. Maybe no because girls provide less support to retired parents (since they earn less and are supposed to have married away into somebody else’s family) and maybe no because they don’t want to lose bargaining power in the marriage.

Data: 122 rural counties and 70 cities. Finding that households with sons save more than those with daughters is not proof of this effect. There could be other reasons for this pattern. What would be compelling evidence? Take two households of sons identical in all respects except the one that lives in a high sex imbalance region saves more than the other who lives in a low sex imbalance region. How to make them identical? Control variables (for local income, social safety net, the age profile of the local population, and province and year fixed effects).

In China, sex ratio was close to normal in 1980 (106:100). Created 30 million surplus men (bare branches). Most from low-income households that will never have the opportunity to marry Suggestive evidence of a correlation between the sex ratio and national saving rate.

What do people say they save for? More suggestive evidence. Ask people why do you save? You can see evidence that people are more motivated to save on behalf of boys than girls. Oddly, people seem to be more motivated to bequeathe assets to girls than to boys. My experience was that parents bequeath only to boys, even when it was the girls that took care of them in their old age! (Wong Shee Tong, Betty’s family).

Saving for marriage. Cultural norm that groom’s family pays for wedding, provide house or apartment for newleyweds. In Table 2, more housing wealth increases odds of son being married. This is like an event study, where wedding is the event. Parents of groom seem to save more agressively for the wedding than bride’s parents.

Main Results Hypothesis: Households with son should save more in regions with more unbalanced sex ratio, after controlling for family income and other characteristics. Look at saving of households with daughters. Do they save more because of retirement concerns or to preserve daughter’s bargaining power, or does woman free-ride on husband’s higher saving rate? The sex-imbalance variation across counties is key. In counties where there is more competition for women, families with sons save more. In those same counties, families of daughters save less, even though (according to the model) the daughter won’t provlde for them in old age. The reason that Wei and Zhang give is that the girl can free-ride off of the higher saving of the man’s family. Or it might just be that daughter families are the control group, and the coefficient is not significant.