nep-cna New Economics Papers
on China
Issue of 2009‒07‒03
two papers chosen by
Zheng Fang
Ohio State University

  1. The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China By Shang-Jin Wei; Xiaobo Zhang
  2. Parental Education and Wages: Evidence from China By Chen, Yuanyuan; Feng, Shuaizhang

  1. By: Shang-Jin Wei; Xiaobo Zhang
    Abstract: While the high savings rate in China has global impact, existing explanations are incomplete. This paper proposes a competitive saving motive as a new explanation: as the country experiences a rising sex ratio imbalance, the increased competition in the marriage market has induced the Chinese, especially parents with a son, to postpone consumption in favor of wealth accumulation. The pressure on savings spills over to other households through higher costs of house purchases. Both cross-regional and household-level evidence supports this hypothesis. This factor can potentially account for about half of the actual increase in the household savings rate during 1990-2007.
    JEL: D1 F3
    Date: 2009–06
  2. By: Chen, Yuanyuan (Shanghai University of Finance and Economics); Feng, Shuaizhang (Princeton University)
    Abstract: Using nationally representative data in China, we find substantial positive partial correlations of both parents' education with one's wage. In addition, returns to father's education are higher in more monopsonistic and less meritocratic labor markets, including non-coastal regions, the state-owned sector, and the early periods of the reform era. The opposite is, however, true with respect to mother's education. Overall, the empirical evidence is consistent with the story that father's education mainly indicates family connections useful for locating a better-paying first job, while mother's education primarily captures unmeasured ability.
    Keywords: parental education, wages, family connections, unmeasured ability
    JEL: J30 J62
    Date: 2009–06

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