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Marriage Market, Parents' Bargaining Powers, and Children's Education

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  • Cheolsung Park

Abstract

Whether the family makes decisions as a unit or through a collective decision making process has been tested elsewhere by examining whether the income pooling hypothesis holds or by examining whether premarital assets have significant effects on household consumptions. The results, however, may be confounded by endogeneity of the income and asset variables. This paper suggests that the marriage market conditions, summarized by the sex ratio, can be used to test the household models and that the test may be combined with the income pooling test to produce more reliable inferences. Using data from Indonesia, this paper conducts the combined test of the household models by estimating the effects of the provincial sex ratio and the parents' nonlabor incomes/premarital assets on Indonesian household's investment in children's education. I find that in urban areas the sex ratio has a strong positive effect on education expenditures, but not in rural areas. Being consistent to the sex ratio effect estimates, the income pooling hypothesis is mostly rejected in urban areas, but not in rural areas. In addition, premarital assets are found to have significant effects on investment in children's education in urban areas, but not in rural areas. I find that the estimation results are robust against alternative definitions of the sex ratio and additional controls for women's fertility choices and community-level income/wealth differences

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Paper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 573.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:feam04:573

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Keywords: Household bargaining; marriage market; children's education; sex ratio;

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  1. Thomas, D., 1989. "Intra-Household Resource Allocation: An Inferential Approach," Papers 586, Yale - Economic Growth Center.
  2. Agnes R. Quisumbing & John A. Maluccio, 2003. "Resources at Marriage and Intrahousehold Allocation: Evidence from Bangladesh, Ethiopia, Indonesia, and South Africa," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(3), pages 283-327, 07.
  3. Esther Duflo, 2000. "Grandmothers and Granddaughters: Old Age Pension and Intra-household Allocation in South Africa," NBER Working Papers 8061, National Bureau of Economic Research, Inc.
  4. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-50, September.
  5. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Working Papers 94-6, University of Washington, Department of Economics.
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  7. Chiappori, Pierre-André & Fortin, Bernard & Lacroix, Guy, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," Cahiers de recherche 0103, Université Laval - Département d'économique.
  8. Marjorie B. McElroy, 1990. "The Empirical Content of Nash-Bargained Household Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 559-583.
  9. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
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  11. Rao, Vijayendra, 1993. "The Rising Price of Husbands: A Hedonic Analysis of Dowry Increases in Rural India," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 666-77, August.
  12. Thomas, D., 1995. "Like Father, Like Son, Like Mother, Like Daughter, Parental Resources and Child Height," Papers 95-01, RAND - Reprint Series.
  13. Angrist, Joshua, 2001. "How Do Sex Ratios Affect Marriage and Labor Markets? Evidence from America's Second Generation," IZA Discussion Papers 368, Institute for the Study of Labor (IZA).
  14. Vijayendra Rao, 2000. "The Marriage Squeeze Interpretation of Dowry Inflation: Response," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1334-1336, December.
  15. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S279-88, Part II, .
  16. Lena Edlund, 2000. "The Marriage Squeeze Interpretation of Dowry Inflation: A Comment," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1327-1333, December.
  17. Park, Cheolsung, 2003. "Interhousehold Transfers between Relatives in Indonesia: Determinants and Motives," Economic Development and Cultural Change, University of Chicago Press, vol. 51(4), pages 929-44, July.
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