The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China
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.
The authors would like to thank Marcos Chamon, Avi Ebenstein, Lena Edlund, Roger Gordon, Ed Hopkins, Tatiana Kornienko, Justin Lin, Olivier Jeanne, Simon Johnson, Nancy Qian, Junsen Zhang, and seminar participants at the NBER and various universities for helpful discussions, Joy Glazener, John Klopfer, and Jin Yang for able research assistance, and the National Science Foundation for financial support through an award for the project "competitive savings, competitive growth, and global implications." The remaining errors are the authors' responsibilities. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
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. citation courtesy of