The high and rising household savings rate in China is not easily
reconciled with the traditional explanations that emphasize life cycle
factors, the precautionary saving motive, financial development, or
habit formation. This paper proposes a new competitive saving motive:
as the sex ratio rises, Chinese parents with a son raise their savings
in a competitive manner in order to improve their son’s relative attractiveness
for marriage. The pressure on savings spills over to other
households. Both cross-regional and household-level evidence supports
this hypothesis. This factor can potentially account for about
half the actual increase in the household savings rate during 1990–
2007.