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The impact of sex ratios before marriage on household saving in two Asian countries: The competitive saving motive revisited

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Abstract

This paper estimates a household saving rate equation for India and Korea using long-term time series data for the 1975–2010 period, focusing in particular on the impact of the pre-marital sex ratio on the household saving rate. To summarize the main findings of the paper, it finds that the pre-marital sex (or gender) ratio (the ratio of males to females) has a significant impact on the household saving rate in both India and Korea, even after controlling for the usual suspects such as the aged and youth dependency ratios and income. It has a negative impact in India, where the bride’s side has to pay substantial dowries to the groom’s side at marriage, but a positive impact in Korea, where, as in China, the groom’s side has to bear a disproportionate share of marriage-related expenses including purchasing a house or condominium for the newlywed couple.

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Notes

  1. See Lafortune (2013) for a similar analysis of the impact of sex ratios not on the household saving rate but on pre-marital educational investments, Wei and Zhang (2011b) for a similar analysis of the impact of sex ratios on the occupational choice of parents, and Grossbard-Shechtman (1993) for a similar analysis of the impact of sex ratios on women’s labor supply.

  2. Note, however, that there is an endogeneity issue here, with the higher housing prices in China and Korea being caused in part by the increased demand for housing caused by the unbalanced pre-marital sex ratio (see, example, Wei et al. 2015).

  3. Indeed, Chen et al. (2013) find using variations across counties in China that access to ultrasound had a significant impact on sex ratios at birth, with 40–50 % of the increase in sex ratios at birth in China being due to improved access to ultrasound.

  4. The regression results for India with the POP1519 variable included are available upon request from the authors.

  5. If the coefficient of the pre-marital sex ratio became positive after 1998, the upward trend in the pre-marital sex ratio after 1998 would be able to explain the upward trend in the household saving rate, but when we tried introducing an interactive term between SEXRATIO and a dummy variable that equals one for all years after 1997 and zero otherwise, we found that the coefficient of SEXRATIO not only remained negative after 1997 but that its absolute magnitude increased even further.

  6. If the coefficient of the pre-marital sex ratio became negative after 1998, the upward trend in the pre-marital sex ratio after 1998 would be able to explain the downward trend in the household saving rate, but when we tried introducing an interactive term between SEXRATIO and a dummy variable that equals one for all years after 1997 and zero otherwise, we found that the coefficient of SEXRATIO not only remained positive after 1997 but that its absolute magnitude increased even further.

  7. Finally, we estimated an error correction model to analyze the short-run dynamics of household saving behavior. The results are not shown in detail because they were not very satisfactory, but we provide a brief summary here. In the case of India, virtually none of the coefficients including that of the error correction term were significant. In the case of Korea, the coefficient of the error correction term was negative and significant in some cases, indicating some tendency to return to equilibrium after a deviation. None of the other coefficients were consistently significant, and moreover, their signs were almost always contrary to expectation. These results suggest that the variables included in the analysis cannot adequately explain short-run household saving behavior, which is not surprising because most of the variables included in the analysis are variables that would be expected to have a longer-term impact on household saving behavior.

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Acknowledgements

The authors would like to thank Jiro Akita, Chetan Ghate, Pedro Gomis-Porqueras, Shikha Jha, Shoshana Grossbard, Tatsuo Hatta, Aziz Hayat, Yoshihiko Kadoya, Takamitsu Kurita, Jaewoo Lee, Seunghwan Leem, Debdulal Mallick, Keunkwan Ryu, Kwanho Shin, Xueli Tang, Hideki Toya, Shinsuke Uchida, Midori Wakabayashi, Junmin Wan, Shang-Jin Wei, Tansel Yilmazer, seminar participants at the Asian Growth Research Institute, Deakin University, Fukuoka University, the International Monetary Fund/Bank of Korea Conference on “Asia: Challenges of Stability and Growth,” Korea University, Nagoya City University, Seoul National University, Tohoku University, and the University of the Philippines, Diliman, two anonymous referees, and especially Yoko Niimi for their very helpful comments, Elenita Pura and Shiela Camingue-Romance for superb research assistance, and JSPS KAKENHI Grant Number 15H01950, the Asian Growth Research Institute, and the Joint Usage/Research Center at the Institute of Social and Economic Research, Osaka University, for their financial support. The views expressed in this paper are those of the authors and do not necessarily reflect the views or policies of the Asian Development Bank, its Board of Directors, or the governments they represent.

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Authors and Affiliations

  1. Asian Growth Research Institute, 11-4, Ohtemachi, Kokurakita-ku, Kitakyushu, Fukuoka, 813-0814, Japan

    Charles Yuji Horioka

  2. National Bureau of Economic Research, Cambridge, MA, USA

    Charles Yuji Horioka

  3. Institute of Social and Economic Research, Osaka University, Osaka, Japan

    Charles Yuji Horioka

  4. Economic Research and Regional Cooperation Department, Asian Development Bank, 6 ADB Avenue, Mandaluyong City, Metro Manila, 1550, Philippines

    Akiko Terada-Hagiwara

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Correspondence to Akiko Terada-Hagiwara.

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Horioka, C.Y., Terada-Hagiwara, A. The impact of sex ratios before marriage on household saving in two Asian countries: The competitive saving motive revisited. Rev Econ Household 15, 739–757 (2017). https://doi.org/10.1007/s11150-016-9344-y

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