The Mating Game: Intergenerational Choices on Marital Arrangements

Recent research has shown that there is an ongoing decline in marriages arranged by the parents of the spouses (AM). This transition is associated with the modernization process (industrialization, higher human capital... [ view full abstract ]

Recent research has shown that there is an ongoing decline in marriages arranged by the parents of the spouses (AM). This transition is associated with the modernization process (industrialization, higher human capital investment, among others). 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(LM). The model is a non-cooperative 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. The opportunity costs of the AM are limited geographic and social mobility - the new couple follows strict post-marital residence rules. In contrast, children having a LM are not geographically nor socially constrained; they might look have access to better-remunerated occupations, and find a spouse of higher quality. In the model, AM disappear as the net benefits of the insurance-arrangement (within their social network) decrease relative to (unconstrained) returns (to human capital) outside of their social group. LM, higher human capital investment and the dissolution of extended households are endogenously determined. However, the transition period might lead to inefficient investment in the human capital of children (parents lower their child's outside option).