Women’s Relative Earnings and Household Financial Market Participation in China

Abstract This study examines whether the distribution of labour earnings between spouses is associated with household financial market participation in China. Using the 2015, 2017 and 2019 waves of the China Household Finance Survey, we measure women’s relative earnings as the wife’s share of the couple’s labour earnings and examine both the decision to hold investment-oriented financial assets and the share of such assets in the household financial portfolio. The results show that women’s relative earnings are positively associated with both dimensions of financial market participation. The relationship remains positive in instrumental-variable estimates and a series of robustness checks. Further analysis shows that women’s relative earnings are positively associated with household risk tolerance, while greater risk tolerance is in turn associated with more active financial market participation, providing evidence consistent with a risk-preference channel. The relationship is concentrated among middle- and high-income households and is not statistically significant among low-income households. These findings suggest that household financial behaviour depends not only on the level of household resources, but also on how earned income is distributed between spouses.