how love conquered marriage: theory and evidence on the ...· how love conquered marriage: theory
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How Love Conquered Marriage: Theory and Evidence on the
Disappearance of Arranged Marriages
University of California, Merced
Using a large number of sources, this paper documents the sharp and continuous decline of arrangedmarriages (AM) around the world during the past century, and describes the factors associated with thistransition. To understand these patterns, I construct and empirically test a model of marital choicesthat assumes that AM serve as a form of informal insurance for parents and children, whereas otherforms of marriage do not. In this model, children accepting the AM will have access to insurance butmight give up higher family income by constraining their geographic and social mobility. Children in lovemarriages (LM) are not geographically/socially constrained, so they can look for the partner with higherlabor market returns, and they can have access to better remunerated occupations. The model predictsthat arranged marriages disappear when the net benefits of the insurance arrangement decrease relativeto the (unconstrained) returns outside of the social network. Using consumption and income panel datafrom the Indonesia Family Life Survey (IFLS), I show that consumption of AM households does notvary with household income (while consumption of LM households does), consistent with the modelsassumption that AM provides insurance. I then empirically test the main predictions of the model. I usethe introduction of the Green Revolution (GR) in Indonesia as a quasi-experiment. First, I show thatthe GR increased the returns to schooling and lowered the variance of agricultural income. Then, I use adifference-in-difference identification strategy to show that cohorts exposed to the GR experienced a fasterdecline in AM as predicted by the theoretical framework. Second, I show the existence of increasing divorcerates among couples with AM as their insurance gains vanish. Finally, using the exogenous variation ofthe GR, I find that couples having an AM and exposed to the program were more likely to divorce,consistent with the hypothesis of declining relative gains of AM.
JEL: B52, C72, J11, J12, O53, O55.
email@example.com, firstname.lastname@example.org. I am truly indebted to my advisor, Adriana Lleras-Muney, for uncountablehours of discussion, guidance and support. I am also particularly grateful to Leah Boustan, Paola Giuliano, Maurizio Mazzoccoand Robert Jensen for their encouragement, numerous discussions and guidance. I would also like to thank Kathleen McGarry,Maria Casanova, Dora Costa, Till von Wachter, Aprajit Mahajan, and Simon Board for helpful comments and suggestions. Ihave also benefited from participants at the Applied Micro Lunch Meeting, the Albert Family Proseminar at UCLA, the 2013All-California Labor Economics Conference, the Applied Microeconomics Seminar at University of California at Riverside, andfrom seminars at Simon Fraser University, Eastern Connecticut State University, University of California at Merced, Universityof Illinois at Chicago, NERA and Boston University. I would like to thank Esther Duflo for making available the data used inher paper Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual PolicyExperiment. All remaining errors are mine.
At the beginning of the 20th century, 72% (or more) of all marriages in Asia and Africa were arranged by
the families of the couple. Throughout the last century, these marriages have decreased by approximately
40%. This paper uses a variety of sources to document this continuous and large decline in arranged mar-
riages in several countries of Asia and Africa (Turkey, Saudi Arabia, Israel, Japan, Korea, China, Taiwan,
Indonesia, Malaysia, Cambodia, Vietnam, Sri Lanka, Nepal, Togo and Ghana). Although a few countries
(India, Pakistan and Bangladesh) do not follow the same patterns (arranged marriages still represent at least
95% of all marriages), young cohorts living in these countries urban areas have also started to move away
from arranged marriages. The goal of this paper is to understand the main driver(s) of the transition by
proposing and testing empirically a model of marital choices. I first show that this transition away from
arranged marriages in favor of self-choice or love marriages is correlated with increases in education, formal
employment, urbanization, and declines in agriculture. These trends are common in all the countries where
micro-data is available, suggesting that despite having different institutions at work, there is a fundamental
economic explanation behind these changes in marriage institutions.
Based on these patterns, I build a simple model of marriage choice. I assume that arranged marriages serve
as a form of informal insurance (as suggested in the literature of sociology, anthropology and economics, e.g.
Rosenzweig and Stark (1989)) whereas other marriages (outside ones networks) do not. In the first period,
parents spend resources on educating their offspring and looking for a spouse for an arranged marriage. Both
investments have pay-offs in the second period when the child earns an education dependent wage subject to
a shock, transfers a share back to her parents and decides to marry the parental arranged spouse or choose
her own spouse. Arranged marriages provide insurance (to both parents and children) because parents (but
not the children) can observe who within their network faces income shocks that are negatively correlated
with their childs shocks (by observing the entire shock histories of other households and by having repeated
interaction with them). However, arranged marriages come with a cost: they constrain the choice set and
the mobility of the child, thereby reducing her potential income, compared to the case in which she has the
option to move geographically, find a more lucrative occupation or a spouse with higher earnings. Thus, there
is a trade-off between marrying within the network and marrying outside the network: individuals might be
willing to give up potentially higher income in exchange for a risk-sharing agreement. The model predicts
that arranged marriages disappear when the net benefits of the insurance arrangement decrease relative to
the (unconstrained) returns outside of the social network. When this is the case, parents invest in more
education for the child, effectively increasing her outside option and, thus, the probability that she will reject
the arranged marriage.
In this framework, the decline in arranged marriages and the increase in years of schooling are endogenously
determined; more specifically, the theoretical framework predicts that when the returns to schooling increase
or the variance of income declines, the demand for insurance decreases households pay a greater cost
or premium for the insurance. I extend the base model in two directions that provide additional testable
implications. First, motivated by the fact that divorce has a low cost in some of the countries studied (e.g.
Indonesia), I introduce the possibility of divorce in a third period. Holding the cost of divorce constant, the
model implies that couples in arranged marriages will have higher rates of divorce as their insurance gains
vanish. Second, I assume two children within the household and theoretically explore how parents decide
which child to offer an arranged marriage. I show that when social networks are small (equivalent to have
insurance partners with positively correlated shocks), parents have incentives to arrange the marriage of only
one child and they choose to marry only the child with the lowest expected return in the labor market.
The second part of the paper uses micro data to test the model. First, I test the main assumption of
the model that arranged marriages provide insurance to the couple.1 I implement a standard test of full
insurance using the first three waves (1993, 1997 and 2000) of the Indonesia Family Life Survey (IFLS). This
is the only data set containing both marriage type, and monthly consumption and income data of couples.
For this test, I assume that the relevant unit for risk sharing is the village or town. If there is full insurance,
the consumption of each individual household should not depend on its income but should have a one-to-one
relationship with the average consumption of the insurance group. Although the test is formally rejected for
both types of marriages, the results show that the consumption of arranged marriage couples does not depend
on their income.2 In contrast, the consumption of couples in love marriages varies significantly with their
income, suggesting that individuals in arranged marriages are better insured. These results are consistent
with Rosenzweig and Stark (1989), who show that households in India use the marriage of their children as
insurance to mitigate the effect of profits shocks on consumption.
I then test the two main predictions of the model, namely that factors that lower the demand for informal
insurance (increasing returns to schooling and decreasing income variance) accelerated the transition to love
marriages and increased the investment in education. To test these predictions, I use the gradual introduction
of the Green Revolution in Indonesia as a quasi-experiment. The Green Revolution refers to a series of
technological innovations associated with the diffusion of higher yield variety seeds in developing countries
in the late 1960s, which increased the ret