Human Capital, Marriage and Regression

This paper proposes a simple search and bargaining model of marriage. In the young age, each person starts with an endowment of financial resources and an inherited cultural orientation. They acquire a marketable human capital and optimally modify their orientation using this endowment. In the second period of their lives, a search for the right spouse and then bargaining for the household orientation, with the chosen spouse, ensues. The resulting pattern of marriage is shown to evolve an unequal distribution of population across the cultural spectrum with considerable concentration in the middle or moderate region. We also illustrate our model using a preference for fertility and the resultant distribution of population. NON-TECHNICAL SUMMARY In this paper we have proposed a simple two period model of individual decision making that focuses on, and culminates in, marriage. We have considered marriage as a two person, a male and a female, Nash bargaining game where the payoffs to both parties depends on their marketable attribute and cultural orientation. The first period of any person’s lifetime is spent in acquiring the optimal levels of attributes where optimality is defined on the basis of his or her expectations in the marriage market next period. The second period is spent in searching for a suitable spouse and bargaining with her/him for the joint household cultural orientation. The couple finishes off by passing on a bequest of orientation and resources to the next generation. Though, throughout the paper, we have discussed our model in terms of marriage, the results of this paper can be easily adapted to describe any situation involving a one-to-one matching. For example, a PhD student and potential supervisor. The results that we demonstrate in this paper are very intuitive in the sense that people with higher inflexibility about cultural values end up with a restricted choice in the marriage market which leads to lower joint production in the household and hence low growth. Also, due to this lower expectation, the extremists may find remaining single the optimal decision and this too will contribute towards the depletion of the growth prospect on the ends of the cultural spectrum. On the other hand, moderate people who are more flexible can search for a partner over a wider set and may expect a better outcome in the marital state. These findings in turn imply that the distribution of population will become more and more oriented towards moderate cultural position. That is, there will be regression along the cultural spectrum towards moderation. In section 6, we illustrate our cultural orientation factor using an example of preference for children. Our intuitions carry over to this section in that we find a bimodal distribution of population with gradual depletion of one of the extremes and faster growth of the middle region. This section also justifies the oft-practised clannish behaviour that is observed in the marriage market and remarks on the consequences of change in popular taste in this context. The aim of this paper has been to illustrate commonly observed behavioural pattern in the conventional marriage market where there are cultural differences and differences in flexibility of people to adapt to different orientation. The outcomes of the search and the bargaining model that we have described are very plausible and our findings can be adapted to situations where there are informational asymmetries between potential partners. For instance, suppose the male is not certain about the cultural orientation of the female, he only has information on the distribution of it. The exact information will only be revealed ex post. In that case, he will compute an estimate of the relevant parameter, using the distributional information and solve his marriage problem with this estimate. Of course, this is a very simplified statement of the problem that ensues with asymmetric information in the marriage market. We are not going into the details of this in the present paper.