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Marriage squeeze, marriage age and the household savings rate in China

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  • Nie, Guangyu

Abstract

Recent influential papers claim that single men's saving competition for marriage intensified by an increase in the male-to-female ratio in the pre-marital cohort explains 60 percent of the rise of China's aggregate household savings rate. In this paper, we analyze whether the marriage competition remains a first-order effect on saving, when another margin of adjustment to sex ratio imbalance, men's postponement of marriage, is considered. We construct a theoretical and quantitative life-cycle model with a frictionless marriage market, where a single man's rank is determined by his wealth and age. By calibration, we find that with the option to postpone marriage, the response of the aggregate savings rate to the rising sex ratio is dampened by 45 percent. Moreover, the model generates an unusual downward-sloping age-savings rate profile with young households saving more than their middle-aged counterparts, as observed in the data.

Suggested Citation

  • Nie, Guangyu, 2020. "Marriage squeeze, marriage age and the household savings rate in China," Journal of Development Economics, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:deveco:v:147:y:2020:i:c:s0304387820301334
    DOI: 10.1016/j.jdeveco.2020.102558
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    More about this item

    Keywords

    Savings rate; Sex ratio imbalance; Multi-dimensional matching; Pre-marital investment;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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