Girls Wanted: China's Gender Imbalance Plays Havoc on Savings Rates

[MP-AI-BOT]

New research from Professor Shang-Jin Wei featured in the latest issue of Columbia Ideas at Work attributes the high savings rate in China to the severely skewed gender ratio — 100 girls born for approximately every 122 boys — that has emerged under the country’s one-child policy, which was instituted in 1980. The result is that today, 30 years later, there is a very competitive marriage market. Parents save at high levels in order to give their sons every possible advantage in attracting a wife, Wei says. It is clear that a rise in the sex ratio imbalance would lead to more unmarried men. In January, China’s state media reported that the government anticipates that at least 24 million men of reproductive age will remain single by 2020.

Wei’s research points to a new macroeconomic implication of China’s gender imbalance. The very high savings rate in China is unparalled in the world. On the economic front, the high savings rate has many implications for global business and there is discussion about whether China can adjust its growth models toward more dependence on domestic consumption, Wei says. While exchange rates are part of that policy toolbox, Wei says that it will be important for China to find a more equal balance between males and females if it expects to change savings behavior. He adds that there are several changes that can be influenced by social policy, including increasing the social preference for female babies; improving the status of women in China and reducing sex-selective abortions by controlling information about a fetus’s gender.

“The research suggests that a serious macroeconomic discussion cannot be divorced from an understanding of the social issues,” Wei says.

Photo credit: bebouchard



More...