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Offspring’s Uncertainty and Dynastic Decisions: Evidence from Urban China
Department of Building and Real Estate, The Hong Kong Polytechnic University.
Department of Economics, Communication University of Beijing, China.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.ORCID iD: 0000-0001-5365-5690
(English)Manuscript (preprint) (Other academic)
Abstract [en]

We investigate the impact of offspring’s income uncertainty associated with college enrollment on intergenerational decisions. We exploit the experiment of the national college entrance examination (NCEE) reform in China, which increases the uncertainty of households containing students of compulsory education age. Based on comprehensive survey data, we find that 1) offspring’s uncertainty arising from the NCEE reform significantly decreases household total consumption and shifts consumption structures toward intergenerational inputs and housing purchases; 2) additional housing demand can be attributed to a dynastic precautionary motivation, which has heterogeneous effects based on a status quo bias toward exposure to and perception of the reform; 3) the inclusion of illiquid housing assets tilts the portfolio of households toward safe and liquid financial assets, and this allocation adjustment makes households financially worse off.

Keywords [en]
offspring’s uncertainty; national college entrance examination; consumption; asset allocation; China
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-343620OAI: oai:DiVA.org:kth-343620DiVA, id: diva2:1839592
Available from: 2024-02-21 Created: 2024-02-21 Last updated: 2024-02-21Bibliographically approved

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fulltext(1036 kB)89 downloads
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Yang, Zan

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf