Abstract
We explore the link between child gender and household financial decisions within a cultural environment that strongly favours having a son. Using data from the China Household Finance Survey (CHFS), we find that the presence of a daughter is associated with a lower saving rate. This is consistent with the hypothesis that such families, facing a less competitive marriage market thanks to the relative under-supply of unmarried women, have lower incentives to raise their female heirs’ marital prospects by accumulating bigger asset pools. The negative correlation becomes more pronounced as the firstborn child and daughter approach marriageable age. Additionally, home-buying intention and daily necessities consumption are the channels through which the daughters influence the saving rate of families with a child of marriageable age. This study expands existing research by examining the impact of child gender on financial decisions while controlling for unobserved time-invariant heterogeneity thanks to the panel nature of the CHFS.
JEL: D14, G11, G51, J12