The Mating Game: (Potential) Intergenerational Conflict on Marital Arrangements

Recent research has shown that across several countries there is an ongoing decline in marriages arranged by the parents of the spouses (AM). This transition has been associated with industrialization, higher human capital investment, incorporation of younger cohorts into paid jobs, urbanization and the dissolution of extended households prominent features of the modernization process. This paper proposes a partial equilibrium model to explain these patterns, highlighting one mechanism within a household through which modernization might lead to self-choice marriages. The model is a noncooperative two-period game between parents and one child, where AM are used as the means to enter into an informal risk-sharing contract with another household (i.e. allows parents to create alliances among them, or reinforce their standing within their social network): if the child accepts the AM, she (and her parents) will share risk with another household. However, the opportunity costs of the arranged marriage are limited geographic and social mobility in order to enforce the informal contract, the new couple follows strict post-marital residence rules. In contrast, children having a self-choice marriage are not geographically nor socially constrained; they might look for a partner with higher labor market return, have access to better-remunerated occupations, and find a spouse of higher quality. The model suggests that arranged marriages might disappear when the net benefits of the insurance arrangement (within their social network) decrease relative to (unconstrained) returns (to human capital) outside of their social group. In this framework, love marriages, increasing investment in human capital and the dissolution of extended households are endogenously determined. Nonetheless, the transition period might be characterized by an inefficient investment in the human capital of children, as parents might try to lower their child’s outside option. JEL: B52, C72, J11, J12, O53, O55. ∗[email protected]. I am truly indebted to my advisor, Adriana Lleras-Muney, for uncountable hours of discussion, guidance and support. I am also particularly grateful to Alex Whalley, Wes Yin, Leah Boustan, Paola Giuliano, Maurizio Mazzocco and Robert Jensen for their comments and suggestions. I have also benefited from participants at the Applied Micro Lunch Meeting and the Albert Family Proseminar at UCLA, the 2013 All-California Labor Economics Conference, the Applied Microeconomics Seminar at University of California at Riverside, and from seminars and conferences at Simon Fraser University, Eastern Connecticut State University, University of California at Merced, University of Illinois at Chicago, NERA, Boston University, ITAM, Bank of Mexico, LACEA-LAMES, SEA, Wesleyan University, and NEUDC. This paper was circulated previously as part of my job market paper “How love conquered marriage: Theory and Evidence on the Disappearance of Arranged Marriages.” All remaining errors are mine.