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A Human Capital-Based Theory of Post Marital Residence Rules

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  • Matthew J. Baker

    ()
    (United States Naval Academy)

  • Joyce P. Jacobsen

    ()
    (Economics Department, Wesleyan University)

Abstract

In pre-modern societies the residence of a newly-wedded couple is often decided by custom. We formulate a theory of optimal post-marital residence rules based on contracting problems created by the nature of pre-marriage human capital investments. We argue that a fixed post-marital residence rule may mitigate a hold-up problem by specifying marriage terms and limiting possibilities for renegotiation; the trade-off is that the rule may prohibit beneficial renegotiation of post-marital 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 post-marital residence patters. We find some predictive ability in variables related to outside options, control over the environment, and potential degree of social control.

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Bibliographic Info

Paper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 2005-006.

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Length: 54 pages
Date of creation: Sep 2005
Date of revision:
Publication status: published in Journal of Law, Economics, and Organization, April 2007, 23 (1): 208-241
Handle: RePEc:wes:weswpa:2005-006

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Related research

Keywords: Marriage; Bargaining; Hold-up Problem; Dowry; Bride-Price;

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References

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Cited by:
  1. Loken, Katrine Vellesen & Lommerud, Kjell Erik & Lundberg, Shelly, 2011. "Your Place or Mine? On the Residence Choice of Young Couples in Norway," IZA Discussion Papers 5685, Institute for the Study of Labor (IZA).
  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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