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A Human Capital-Based Theory of Postmarital Residence Rules

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  • Matthew J. Baker
  • Joyce P. Jacobsen

Abstract

In premodern societies, the residence of a newly wedded couple is often decided by custom. We formulate a theory of optimal postmarital residence rules based on contracting problems created by the nature of premarriage human capital investments. We argue that a fixed postmarital residence rule may mitigate a holdup problem by specifying marriage terms and limiting possibilities for renegotiation; the trade-off is that the rule may prohibit beneficial renegotiation of postmarital location. A point of interest of our approach is that the magnitude and direction of transfers accompanying marriage are endogenous. We apply our theoretical results to understanding cross-cultural postmarital residence patterns. We find some predictive ability in variables related to outside options, control over the environment, and potential degree of social control. Copyright 2007, Oxford University Press.

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Article provided by Oxford University Press in its journal The Journal of Law, Economics, and Organization.

Volume (Year): 23 (2007)
Issue (Month): 1 (April)
Pages: 208-241

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Handle: RePEc:oup:jleorg:v:23:y:2007:i:1:p:208-241

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Cited by:
  1. Løken, Katrine & Lommerud, Kjell Erik & Lundberg, Shelly, 2011. "Your place or mine? On the residence choice of young couples in Norway," CEPR Discussion Papers 8640, C.E.P.R. Discussion Papers.
  2. Conley, John P. & Neilson, William, 2009. "Endogenous games and equilibrium adoption of social norms and ethical constraints," Games and Economic Behavior, Elsevier, vol. 66(2), pages 761-774, July.
  3. Louise Grogan, 2013. "Household Formation Rules, Fertility and Female Labour Supply: Evidence from post-communist countries," Working Papers 1302, University of Guelph, Department of Economics and Finance.
  4. Matthew J. Baker, 2004. "Human Capital and Hold-ups in Indigenous Society: The Role of Customs and the Market," Departmental Working Papers 7, United States Naval Academy Department of Economics.

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