How Too Many Boys Skew China’s Economy

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The government’s fight to control housing prices and save the economy is tied to some very fundamental human impulses and decisions made decades ago.

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In addition, some of these economic distortions may be exacerbated by another trend: A widening wage and workforce participation gap between men and women. According to data from the World Economic Forum, China has a smaller gender pay gap than most upper-middle-income countries, but it is still substantial. Over the past several years, researchers have begun to investigate what this could mean – not just for men, but for the Chinese economy as a whole. One conclusion is that the impact on housing prices, in particular, may be much greater as men are often expected to own an apartment in order to marry.

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A 2017 analysis by economists including Colombia’s Shang-Jin Wei, former chief economist of the Asian Development Bank, found housing prices were significantly higher relative to income in Chinese cities, where the sex ratio was more skewed. Economists’ models suggest that a rising sex ratio in real housing prices in major Chinese cities from 2003 to 2009 could benefit more than 30%. A separate 2020 paper from economists at the University of Birmingham, using data from 2011 and 2013, found that families with sons of marriageable age were more likely to acquire multiple homes, especially in areas with highly skewed sex ratios.

The relentless pressure on young men and their families to buy housing is probably also related to China’s stubbornly high household savings rate and low consumption levels—particularly when that pressure is combined with a labor market that continues to underestimate female workers. Is. According to recruitment website Zipin, urban female employees earned an average of 6,487 yuan ($1,019) monthly in 2020, up 75.9% of the men’s average. In the US, female workers make up about 82% of the average male salary, compared to 87.5% for members of the Organization for Economic Co-operation and Development in 2019, according to group data.

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If families with men and sons are over-represented in China’s population as a whole, earn most of the country’s income, and are under enormous pressure to save to compete in the marriage market, this is perhaps not surprising. That China saves a lot overall is what it earns.

Of course, many other factors are also at play, including, until recently, a low dependency ratio, a weak social safety net and widespread financial repression, making it difficult to build up savings through interest income. But as Beijing cautiously attacks the housing sector on its full front – and housing sales show signs of a temporary rebound – it is worth remembering just how deep and powerful are the cultural, demographic and financial forces that Beijing is facing. as it tries to wrest the Chinese economy on a more productive, less housing-centric path.

Write Nathaniel Taplin at [email protected]

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