Son Preference and the Missing Market for Social Insurance: Evidence from China’s Rural Pension Program

Avraham Ebenstein, Harvard University
Steven Leung, Harvard University

China’s high sex ratio at birth and its dramatic rise in recent years has alarmed policy-makers worldwide. Many argue that the persistence of son preference is driven by greater anticipated old-age support from sons relative to daughters and the absence of formal financial mechanisms for families to save for retirement (Das Gupta et al. 2003). We exploit the introduction of voluntary old-age insurance in rural China in the 1990s to examine whether (1) parents with sons are less likely to participate in pension plans and (2) providing access to pension plans affects parental sex selection decisions. Consistent with the first hypothesis, we find that parents with sons are less likely to participate in the pension program and have less financial savings for retirement. Consistent with the second hypothesis, we find that the 1991 implementation of rural old-age pension programs mitigated the increase in the sex ratio.