IZA DP No. 16440: Daughters, Savings and Household Finances
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 daughter approaches 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.