Ethnicity in Children and Mixed Marriages: Theory and Evidence from China∗

This paper provides a framework to link the ethnic choice for chil-dren with interethnic marriage in a setting where ethnic choices reflect material and immaterial incentives, as well as the interaction between the two. Our model is constructed to be consistent with four moti-vating facts for ethnic choices in China, but it also delivers a rich set of auxiliary predictions. The empirical tests on Chinese microdata generally find support for these predictions. In particular, we provide evidence that social norms can crowd in or crowd out material benefits in ethnic choices. We also evaluate how sex ratios affect interethnic marriage patterns and how their effects are strengthened or dampened by ethnic choices for children in mixed marriages. ∗We are grateful to Roland Benabou, Jean Tirole, and particpants in the UCSD de-velopment lunch for helpful comments, and to the ERC and the Torsten and Ragnar Söderberg Foundations for financial support