Parental Sex Selection and Gender Balance

We consider a society where parents prefer boys to girls, but also value grandchildren. Parental sex selection results in a biased sex ratio that is socially ine¢ cient, due to a congestion externality in the marriage market. Improvements in selection techniques aggravate the ine¢ ciency. These results are robust to allowing prices in the marriage market, if the market is subject to frictions. We extend the model to consider gender preferences which depend upon family composition, allowing us to examine the possible sex ratio e¤ects of China’s one-child policy, and the implications of choice in societies where family balancing considerations are paramount.