How Love Conquered Marriage: Theory and Evidence on the Disappearance of Arranged Marriages

Using a large number of sources, this paper documents the sharp and continuous decline of arranged marriages (AM) around the world during the past century, and describes the factors associated with this transition. To understand these patterns, I construct and empirically test a model of marital choices that assumes that AM serve as a form of informal insurance for parents and children, whereas other forms of marriage do not. In this model, children accepting the AM will have access to insurance but might give up higher family income by constraining their geographic and social mobility. Children in love marriages (LM) are not geographically/socially constrained, so they can look for the partner with higher labor market returns, and they can have access to better remunerated occupations. The model predicts that arranged marriages disappear when the net benefits of the insurance arrangement decrease relative to the (unconstrained) returns outside of the social network. Using consumption and income panel data from the Indonesia Family Life Survey (IFLS), I show that consumption of AM households does not vary with household income (while consumption of LM households does), consistent with the model’s assumption that AM provides insurance. I then empirically test the main predictions of the model. I use the introduction of the Green Revolution (GR) in Indonesia as a quasi-experiment. First, I show that the GR increased the returns to schooling and lowered the variance of agricultural income. Then, I use a difference-in-difference identification strategy to show that cohorts exposed to the GR experienced a faster decline in AM as predicted by the theoretical framework. Second, I show the existence of increasing divorce rates among couples with AM as their insurance gains vanish. Finally, using the exogenous variation of the GR, I find that couples having an AM and exposed to the program were more likely to divorce, consistent with the hypothesis of declining relative gains of AM. JEL: B52, C72, J11, J12, O53, O55. ∗gabrielarubio@ucla.edu, grubio4@ucmerced.edu. I am truly indebted to my advisor, Adriana Lleras-Muney, for uncountable hours of discussion, guidance and support. I am also particularly grateful to Leah Boustan, Paola Giuliano, Maurizio Mazzocco and Robert Jensen for their encouragement, numerous discussions and guidance. I would also like to thank Kathleen McGarry, Maria Casanova, Dora Costa, Till von Wachter, Aprajit Mahajan, and Simon Board for helpful comments and suggestions. I have also benefited from participants at the Applied Micro Lunch Meeting, 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 at Simon Fraser University, Eastern Connecticut State University, University of California at Merced, University of Illinois at Chicago, NERA and Boston University. I would like to thank Esther Duflo for making available the data used in her paper “Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment.” All remaining errors are mine.