The Number of Minor Children and Household Allocation to Risky Financial Assets: Evidence from the 2021 China Household Finance Survey

Abstract

Using microdata on 17,744 households from the 2021 China Household Finance Survey (CHFS), this study employs Probit and Tobit models to examine the association between the number of minor children and household participation in risky financial markets, as well as the share of financial assets allocated to risky assets. After controlling for homeownership, marital status, and household economic characteristics, each additional minor child is associated with an average decrease of 0.54 percentage points in the probability of market participation and 3.32 percentage points in the risky asset share. Both baseline estimates are statistically significant at the 10% level. These findings are consistent with liquidity constraints and precautionary saving. Estimates by number of children suggest a nonlinear pattern: the coefficients for households with two or more minor children are negative and statistically significant, whereas those for households with one minor child are not statistically significant. The negative association is more pronounced in the rural sample; the corresponding coefficients in the urban sample are not statistically significant. By jointly examining market participation, portfolio allocation, nonlinear patterns, and urban–rural differences, this study adds microeconomic evidence on the relationship between household demographic structure and financial asset allocation. The findings also inform the coordinated design of policies supporting childbearing and financial inclusion.