Marriage Market Competition and the Allocation of Parental Investment

Speaker: A/Prof Simon Chang

Affiliation: University of Western Australia

Location: Level 6 Boardroom (629), Colin Clark Building (#39), St Lucia Campus

Zoom: https://uqz.zoom.us/j/82603079317

Abstract: Male-biased sex ratios intensify anticipated competition in the marriage market, shaping how families invest in their children. This paper studies how such demographic imbalances affect human capital investment in China. We show that parents respond to this anticipated competition by reallocating resources between education and wealth-type investments to improve their child’s marriage prospects. As the sex ratio becomes more male-biased, wealth-type investments become relatively more effective, leading parents to shift resources away from sons’ schooling. Using variation induced by the interaction between prenatal ultrasound diffusion and pre-existing son preference, we find that a one standard deviation increase in the sex ratio reduces boys’ schooling by 1.8 years, with no corresponding effect on girls. Consistent with this mechanism, higher sex ratios increase bride prices and reduce the perceived importance of education among parents of sons. These findings uncover a forward-looking channel through which demographic pressure crowds out human capital investment.