1. Gender bias & parental choice Foetal sex determination + selective abortions Sex ratio in census biased against girls Jha et al (Lancet, 2006) -- survey of 1.1 million households in India Difference in sex ratios of additional child depending on sex of previous children Interpreted as evidence of selective abortion “10 million missing female births” over 20 years

2. Elsewhere? China – “40 million girls are missing” Evidence of gender preferences in US Probability of having 3 rd child highest for parents with 2 girls Lower for parents with 2 boys, lowest for 1B 1G

3. Dahl-Moretti divorce rate higher if first child is a girl (fathers seem to prefer boys) Shotgun marriage rate higher when first child is boy (ultrasound) Prob. Of second child higher when first is girl Survey evidence: fathers prefer boys

4. Gallup poll of 2129 adults, 2000 & 2003 Suppose you could have only 1 child, what gender would you prefer? Women: 35% G, 30% B Men: 19% G, 48% B

5. How can this imbalance persist? Market failure in the marriage market? Parents failing to realize that future market conditions may be very different from today’s?

6. Is parental choice good? Dharma Kumar (1983): given discrimination, parental choice can reduce gender bias by improving women’s position in marriage market Contrary view -- sex determination & selective abortion illegal in India.

7. How should we think about welfare If abortion is fine…what about selective abortions? If foetus has no rights, then does not enter welfare calculation Welfare in terms of parents and surviving children

8. Bride Price/dowry Let q be the bride price that clears the marriage market Two models a) Walrasian markets b) Frictional search market

9. Walrasian Market r (sex ratio) Bride price ρ -ρ 1

10. Rational expectations equilibrium Parents make decisions at t=0 At t=1, marriage market operates Bride price q – transfer from boy to girl

11. Rational expecations eq Price & sex ratio (q*,r*) anticipated at t = 0 Parents make choices to maximize payoffs Payoff from boy is U(r*)-q* Payoff from girl is V(r*)+q*

12. Unique REE ratio is r*=1 Many possible bride prices in equilibrium One possible bride price is q* such that U(1)-q*=V(1)-q* Parents indifferent between boys and girls at this price. Other bride prices also possible, where U(1)-V(1)-2q* ≤ 2c and V(1)+2q*-U(1) ≤ 2c Equilibrium is efficient

13. Frictional market r (sex ratio) Bride price ρ -ρ 1

14. Marriage market with frictions Price determined thru decentralized bargaining. If r=1, q=0. If r<1 but close to 1, q will be positive but small (small imbalances have small price effects) In equlibrium, r* 0

15. Welfare Welfare increasing in x at x * Congestion externality still obtains (efficient ratio not necessarily 1)

16. Policy Ban on selective abortion: unworkable? Incentives for having girls + tax on boys Removing gender discrimination in workplace Future social problems arising from sex ratio (externalities of other sorts) Liberalizing of laws, e.g. on homosexuality

17. Extensions Heterogeneity in wealth poor boys may be worst off in marriage market imperfect foresight?

18. Conclusion In the absence of prices, parental choice reduces welfare due to congestion externality With bride prices, the sex ratio will be balanced in REE if the marriage market is Walrasian With prices and a frictional market, the sex ratio can be unbalanced, and inefficient. Congestion externality in marriage market.

19. Implications for UK and DCs Allowing gender choice for family balancing reasons May or may not result in aggregate imbalances If no aggregate effects, then choice improves welfare May be offset by aggregate effects E.g. if parents with 1 girl more likely to select than those with 1 boy.