HOUSEHOLD BEHAVIOR AND THE MARRIAGE MARKET

Abstract

The first chapter proposes a model of imperfect commitment within marriage, and shows how this affects premarital investments in children. A male-biased sex ratio induces families with a son to increase total investments, and to shift the composition towards physical capital and away from human capital. Empirical evidence from China is consistent with the predictions: When the sex ratio is biased towards males, parents of boys, relative to those of girls, are more likely to migrate, and to increase housing investment at the expense of lower child educational investment. The second chapter studies the effect of sex-ratio imbalance on household portfolio choices. Parents of sons have a higher reference level of marriage expenditure when sex ratios are male-biased, so they become less risk averse and hold more risky assets. Empirical results using Chinese household data are consistent with the predictions. Further evidence corroborates the reference-dependent mechanism.