Intrahousehold Property Ownership and Children’s Undesirable Behaviors in China

Abstract

How do intrahousehold property division laws affect children’s behaviors? This study answers this question by exploiting a unique quasi experiment from China. In 2011, the Chinese Supreme court reversed a decades-long trend towards improved property rights for married women, altering property division upon divorce from an equal-division regime, which put women on an equal standing to men, to a title-based regime which left them at a clear disadvantage. On the one hand, this legal change may increase children’s undesirable behaviors (e.g., smoking, drinking alcohol, etc.) by negatively affecting parents’ investment in children’s human capital, family relationships, and parenting practices. On the other hand, the legal change may decrease children’s undesirable behaviors by increasing homes owned by children and improving parenting practices. We compare undesirable behaviors of affected and unaffected children before and after the legal change using a difference-in-differences design. We find that it decreased children’s undesirable behaviors in 2012 and 2014 by 4% and 7%, respectively. The reduction in children’s undesirable behaviors was particularly large among boys, children from disadvantaged backgrounds, and children whose parents had relatively high divorce propensity. The effect of the 2011 judicial interpretation was likely driven by increased child home ownership and improved parenting practices. Our findings have important implications on policies promoting asset building for children, particularly those with disadvantaged backgrounds.

Keywords: Property Rights, Household Bargaining, Child Development, China

JEL Classification: J1