Gender preference in China: A study with indirect utility function

The traditional view is that China is a strong son preference country, and some empirical studies support such view. We argue that demand for children, including sex of children, and family size, is the outcome of economic decisions in which social and economic factors could interact with gender preference. Thus, it is possible that strong social and economic factors counteract the strong son preference and lead to daughter preference. To investigate this possibility, we propose an indirect utility function approach and apply it to a recent Chinese data set. We find strong evidence on preference reversal as incomes and child rearing costs rise substantially for Chinese urban parents. Given that China is now a middle-income country and child rearing costs have skyrocketed during the last four decades, we find that Chinese parents with one child have little interest in rushing to have a second child. This does not bode well for the Chinese government’s programs to improve demographics.