Tuesday, November 11, 2014

The economics of the transition from arranged marriage to love marriage in Indonesia

Using a large number of sources, this paper documents the sharp and continuous decline of arranged marriages (AM) around the world during the past century, and describes the factors associated with this transition. To understand these patterns, I construct and empirically test a model of marital choices that assumes that AM serve as a form of informal insurance for parents and children, whereas other forms of marriage do not. In this model, children accepting the AM will have access to insurance but might give up higher family income by constraining their geographic and social mobility. Children in love marriages (LM) are not geographically/socially constrained, so they can look for the partner with higher labor market returns, and they can have access to better remunerated occupations. 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. Using consumption and income panel data from the Indonesia Family Life Survey (IFLS), I show that consumption of AM households does not vary with household income (while consumption of LM households does), consistent with the model’s assumption that AM provides insurance. I then empirically test the main predictions of the model. I use the introduction of the Green Revolution (GR) in Indonesia as a quasi-experiment. First, I show that the GR increased the returns to schooling and lowered the variance of agricultural income. Then, I use a difference-in-difference identification strategy to show that cohorts exposed to the GR experienced a faster decline in AM as predicted by the theoretical framework. Second, I show the existence of increasing divorce rates among couples with AM as their insurance gains vanish. Finally, using the exogenous variation of the 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 AMGabriela Rubio of UC Merced.

Rubio lists a related paper at her website (link above):
The Love Revolution: The Decline in Arranged Marriages in Asia, the Middle East and Sub-Saharan Africa

Abstract: Arranged marriages (AM) have existed in many societies throughout time, and they have acted as a mechanism that enables two families to enter into an informal contract that will provide benefits to their members; for example, create political alliances, ensure consumption smoothing, facilitate economic transactions, consolidate power, increase wealth, among others. In Europe, they disappeared towards the 12th century, remaining popular only among the wealthy class finally disappearing after the Industrial Revolution. In Asia and Africa they remained the most popular marriage institution until the middle of the 20th century. This paper documents a striking decline in AM and a raise in love marriages (LM) in Asia, the Middle East and Sub-Saharan Africa, showing the transition for 18 countries. This paper also documents several stylized facts by type of marriage, finding that women in AM tend to live in rural areas, have lower education, belong to agricultural and land-owning households, and are engaged in non-paid activities. In addition, it summarizes the main explanations found in the literature of Economics, Sociology and Anthropology for the existence of AM. Based on these potential explanations and using the patterns described, I suggest two hypotheses regarding the causes behind their decline: (i) a decrease in the value of informal insurance arrangements and (ii) an increase in the cost of informal insurance arrangements. I discuss several economic changes that could lead to either explanation. Finally, I analyze some potential welfare consequences of the transition, focusing on measures of domestic violence, finding that women in AM are more prone to suffer domestic abuse.

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