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WORKING PAPER

395.

Are There Increasing Returns to Scale in Marriage Markets?
By Maristella Botticini and Aloysius Siow

The goal of an individual searching for a marriage partner is typically to form a long-term relationship. Marital search is a complicated and costly activity, where opportunities typically arrive over time at uncertain intervals, each party has to evaluate each other's characteristics, and expectations play an important role. Given these features of marital search, a seminal paper by Mortensen (1988) has shown that the matching framework can be suited for the analysis of marriage markets and also raised the possibility of a thick market externality in these markets. We contribute to this literature by empirically investigating whether marriage markets are characterized by increasing, constant, or decreasing returns to scale. We focus on three societies—late medieval and early Renaissance Tuscany, China in the 1980s, and the United States in 2000—which are different in terms of population size, economic structure, sex ratios, marriage transfers, and the social norms governing marriage markets. Our main finding is that in all three societies, there is no evidence of increasing returns to scale in marriage markets, whereas the hypothesis of constant returns to scale cannot be rejected. The remarkably similar and precise estimates suggest that the number of eligibles (and potential contacts) in a marriage market is less important than economic factors, such as wealth levels and income dispersion, in affecting the marriage rate across different societies. The key message is that where individuals live, in large cities or small towns, have a minimal effect on their marriage rates.

JEL Classification: J12, J41
Keywords: marriage markets, matching, thick market externality, returns to scale,
spousal search, endogeneity

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Last updated May 27, 2011