Developing Economies

'A Sexually Unbalanced Model'

People in China save much higher percentage of their income than people in the U.S.

There are lots of possible reasons for this — there's less of a government safety net in China, there's more of a culture of saving, etc.

A new study suggests another reason: the surplus of men in the marriage market.

The ratio of men to women has risen significantly in China in recent years; it's largely the product of gender-specific abortion, as The Economist explained in this recent piece.

The trend has been growing for many years. Between 2000 and 2005, there were more than 120 baby boys born in China for every 100 baby girls.

In a society where monogamy is the norm, this means you wind up with a lot of unmarried men. This, in turn, makes parents anxious to to maximize their sons' appeal to the opposite sex. One way to do this is to save a lot of money.

Earlier this year, one of the authors of the paper discussed the research at Vox. The evidence he cited included this:

First, in panel regressions across 30 Chinese provinces during 1990-2007, the local savings rate tends to be higher in regions and years in which the local gender ratio is higher. This continues to be true after we control for local income level, income inequality, the enrollment in the social security system, the age profile of the local population, and the province and year fixed effects.

Of course, it's still possible that this sort of thing is just a coincidence.

Still, the savings imbalance between China and the U.S. is an important piece of the global economic picture.

And, the authors say, their models suggest that increased savings due to China's growing gender imbalance plays a significant role in this savings imbalance.

The authors, Qingyuan Du and Shang-Jin Wei, are professors at Columbia University. Their paper is called "A Sexually Unbalanced Model of Current Account Imbalances."

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