The Motive of Compensatory House-Purchase: Continuous Improvement in the Sex Ratio of Higher Education and the Rise of Housing Prices

Abstract

In recent years, a very important phenomenon has emerged in the marriage market, which is the change of the sex ratio of higher education （manifested as the significant improvement of women’s education compared with men’s education）. This paper uses micro survey data and pro-vincial panel data to investigate the relationship between this phenomenon and the rise of housing prices comprehensively. It attempts to answer the following two questions: （1） How does the change of the sex ratio of higher education affect residents’ house-purchase behavior? （2） Does the micro motive caused by the change of the sex ratio of higher education promote the rise of housing prices at the macro level?\u3000\u3000Based on the marriage theory of Becker, this paper puts forward a new motive of house-purchase, which provides a theoretical explanation for the increasing pressure of men of house-purchase and links the sex ratio of higher education to the rise of housing prices in China. The main logic of this paper is that, because of the mechanism inflexibility of the marriage income distribution, the bargaining power of men and women before marriage is not consistent with the income distribution after marriage. With the continuous improvement of the sex ratio of higher education （women/men）, men will compensate for the improvement of women’s education level by buying a house in the marriage matching.\u3000\u3000Family-level data and provincial-level data confirm this hypothesis. Family-level results show that households with wives of higher education are more likely to buy houses than to rent. In the provincial panel regression, the ratio of females above junior college to males is used to measure the sex ratio of higher education, and the results show that the faster the sex ratio of higher education increases, the faster the housing price rises. This paper expands the research on the influence of the marriage market on housing prices. Existing research ignores this important phenomenon in the marriage market, that is, the number of marriageable women is decreasing relatively, and their quality is also greatly improving relatively.\u3000\u3000This paper has important theoretical significance. The hypothesis proposed in this paper complements the research of Wei et al. （2012）, and does not have a major defect in their paper, that is, the imbalance of the sex ratio of marriageable population mainly occurs in economically backward regions, while the rise of housing prices mainly occurs in economically developed regions. The compensatory effect caused by the sex ratio of higher education and the tournament effect caused by the imbalance of the sex ratio of marriageable population jointly affect the house-purchase pressure of men, if we only emphasize the tournament effect caused by the imbalance of the sex ratio of marriageable population, we cannot explain many other phenomena. Moreover, this paper has important practical significance. The spread of the public opinion that mother-in-laws drives up housing prices” illustrates that buying a house for marriage in China is the most important motive of house-purchase, hence this paper points out that the government should weaken the influence of the compensatory house-purchase motive on housing prices through many measures, such as guiding the public opinion.