An Endogenous Sex Selection Model and a Test Using the Chinese Census

The parental sex selection behaviour of altruistic parents without gender specific preference in a monogamous marriage market is studied. Using an OLG model with intra-household resource allocation determined by marriage market bargaining, we find that the equlibrium with a balanced male/female ratio is unstable. Depending on the effect of the marriage market sex ratio on intra-household allocation, there exist stable equilibria with unbalanced sex ratios. Specifically, if the marriage market responsiveness elasticity is small enough and males earn more than females, an equilibrium with a male/female birth ratio in excess of one is stable. From that equilibrium, a reduction in the value of a marriage will tend to increase the male/female birth ratio. This foreshadows the result from the extended model in Yang (2013a), where a reduction in the value of a marriage is attributed to China’s one-child policy, which is empirically associated with an increase in the male/female birth ratio. Another empirical implication of the model is the requirement for equilibrium that the marriage market male/female sex ratio has a negative effect on the number of male births. We find empirical support for this proposition in the 2000 Chinese census.