Multidimensional Premarital Investments with Imperfect Commitment

V. Bhaskar, Wenchao Li and Junjian Yi

Journal of Political Economy, 2023, vol. 131, issue 10, 2893 - 2919

Abstract: We analyze premarital investments in human capital and housing when individuals are unable to make binding commitments to share their labor income with a prospective spouse. Investments are distorted if there are gender differences in bargaining power over own labor income or marriage market imbalances. Distortions are magnified when ex ante bargaining power favors one sex (e.g., women in China) and ex post bargaining power favors the other (e.g., men in China), since parents of boys will increase housing investments in order to credibly commit to share more resources with the boy’s potential wife, possibly crowding out human capital investments.

Date: 2023
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Working Paper: Multidimensional pre-marital investments with imperfect commitment (2022)
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