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A Human Capital-Based Theory of Post Marital Residence Rules

  • Matthew J. Baker

    ()

    (United States Naval Academy)

  • Joyce P. Jacobsen

    ()

    (Economics Department, Wesleyan University)

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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File URL: http://repec.wesleyan.edu/pdf/jjacobsen/2005006_jacobsen.pdf
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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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