A recent Wall Stree Journal article talks about a paper recently posted to the National Bureau of Economic Research’s website, arguing that because there is a shortage of women in China (China as a whole has 120 boys born for every 100 girls, in some regions up to 192 boys for every 100 girls), families have to save more to make their boys more attractive for marriage. There also seems to be a clear correlation between the disparity of boys to girls and the extent of the disposable income savings. This high savings rate (30% of disposable income in 2007) ultimately gets converted into US treasuries which then pushes down interest rates and with it makes borrowing in the US too cheap for their own good. No arguing there.
But I just don’t see a clear cause-effect relationship between an overpopulation of boys and high savings rate. More rural areas have more sons and also have higher savings rates, but they are also poorer – maybe that’s why they have higher savings rates. Places like Shanghai have the lowest boy-girl disparity (108 boys for every 100 girls) and also have the lowest savings rate, but they are also the richest.
What do you think?
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Rather interesting. Has few times re-read for this purpose to remember. Thanks for interesting article. Waiting for trackback