A Human Capital-Based Theory of Postmarital Residence Rules

Matthew Baker () and Joyce Jacobsen ()

Journal of Law, Economics and Organization, 2007, vol. 23, issue 1, pages 208-241

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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Working Paper: A Human Capital-Based Theory of Post-Marital Residence Rules (2003)
Working Paper: A Human Capital-Based Theory of Post Marital Residence Rules (2005)
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