It's a Boy! Culture, Wealth, Real Estate and Consumption in China

Abstract

The effect of children on household wealth and consumption patterns in China is investigated. Chinese cultural norms including indulgent care of single children, a strong preference for sons, increasing competition in the marriage market and the importance of homeownership in marriage suggest that the number, gender and age of children may impact a household’s investment and consumption behavior. Using China Family Panel Studies’ (CFPS) longitudinal data, we find that, after controlling for other factors, total wealth (consumption) for households with children is 18.1% (23.5%) more than that of households without children. More interestingly, further results show that households with male children have more wealth accumulation and more expenditure on consumption with a higher likelihood of owning additional residential real estate when compared to households with no or female children. The positive effect associated with children on household wealth is largely due to increased housing wealth including the ownership of additional residential units. The pattern of wealth and real estate ownership follows cultural and social norms.