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

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  • Shang-Jin 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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15093.

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Date of creation: Jun 2009
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Handle: RePEc:nbr:nberwo:15093

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