The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China

Shang-Jin Wei, Xiaobo Zhang

NBER Working Paper No. 15093
Issued in June 2009
NBER Program(s):   IFM   ME

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.

(311 K)

Published: Shang-Jin Wei & Xiaobo Zhang, 2011. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 511 - 564.

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This paper was revised on December 5, 2011

Acknowledgments

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