Making Yourself Attractive: Pre-Marital Investments and the Returns to Education in the Marriage Market∗

نویسنده

  • Jeanne Lafortune
چکیده

While several studies examine the effect of marriage market conditions on post-marital labor supply, few account for the effect of these conditions on pre-marital investment decisions and mate selection. This paper investigates theoretically and empirically how changes in marriage market conditions affect pre-marital investments. I first show how a change in the sex ratio – that is, the ratio of males to females – can alter incentives for investments through either altering the matching probabilities or the post-match bargaining process. The model predicts that a rise in the sex ratio will lead men to increase pre-matching investments and women to decrease them if agents are sufficiently risk averse. I test this prediction using exogenous variation in the marriage market sex ratio, brought about by immigration, exploiting the preference of second generation Americans for endogamous matches. I find that a worsening of marriage market conditions spurs higher pre-marital investments, measured by years of education, literacy and occupational choice. Specifically, a change in the sex ratio from one to two leads men to increase their educational investment by 0.5 years on average and women to decrease it by (an insignificant) 0.05 years. In addition, the sex ratio significantly affect post-marital labor supply through pre-marital investments suggesting that accounting for these effects when using marriage market conditions as proxies for ex-post bargaining power is important. Overall, the results suggest that there are substantial returns to education in the marriage market, and that both men and women take these returns into account when making education decisions. ∗I am particularly indebted to my advisors, Esther Duflo and David Autor for their comments and advice. I also wish to thank Josh Angrist, Abhijit Banerjee, Alan Manning, Tavneet Suri, Tal Gross, Patrick Warren, Suman Basu and José Tessada for their valuable suggestions and support. I also benefited from comments from the participants at seminars at MIT, PUC-Chile, UCLA, UC Berkeley, University of Maryland-College Park, Carleton University, University of Toronto, Université de Montreal, Universitá Bocconi, University of Virginia, Board of Governors of Federal Reserve Bank, the ZEW “Gender and Labor Markets” workshop and SOLE. I acknowledge financial support from the Social Sciences and Humanities Research Council of Canada. All remaining errors are my own. †Economics Department, University of Maryland, Tydings Hall, College Park, MD 20742. E-mail: [email protected]

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Making Yourself Attractive: Pre-Marital Investments and the Returns to Education on the Marriage Market

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تاریخ انتشار 2009