Marriage and Fertility in a Catholic Society: Eighteenth-Century Quebec

There are similarities and differences in marriage and fertility behavior between early North American societies and their modern counterparts. This paper investigates the quantitative importance of differential fecundity, assortative matching, and marriage market search frictions in affecting marriage and fertility behavior in a Catholic society, 18th century Quebec. The model may provide an explanation for both the historic and current experience.

Are there Increasing Returns in Marriage Markets?

The returns to scale of marriage markets have important behavioral and welfare consequences. It is quantitatively difficult to estimate the returns to scale because, due to endogenous migration, the marriage market size is endogenous. This paper addresses the endogeneity in two ways. First, it estimates the degree of returns to scale in U.S. marriage markets using the 2000 census. Given that in the United States people move to cities to find marriage partners and, therefore, the size of the marriage market is endogenous, we instrument the current size of a cohort in the marriage market with the size of that cohort twenty years earlier. Second, it estimates city scale effects in two societies---early Renaissance Tuscany and pre-reform China---where there was little internal mobility, and thus, the size of the marriage market can be considered exogenous. The 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. This is true when looking at marriage odds ratios, total gains to marriage, and the quality of marital match. Given the different characteristics of the three societies in terms of population size, time period, economic structure, and social norms characterizing the marriage market, the similarity and precision of the estimates for returns to scale parameters is remarkable.Increasing returns, marriage market, United States, China, Renaissance Tuscany

Self-Promoting Investments

What is the impact on human capital investment when a worker's ability and investments are observed by the labour market only when the worker invests in self-promoting activities? When firms pay spot market wages, high ability workers overinvest in self- promotion. There is no employment contract that attains full efficiency. Constrained efficiency is attained when employment bonds are feasible. \ The contract that both attains constrained efficiency and minimizes the bond posted offers (i) severance payments, (ii) strategically matching outside offers and (iii) a minimum wage.

Competing Premarital Investment

This paper studies pre-marital parental investments in their chil- dren's wealth where spousal wealth is a public good in marriage. By investing in their children's wealth, parents increase the wealth of their children and the quality of the spouses that their children can marry. In large marriage markets, the hedonic return to investment internal- izes all the external benefits of pre-marital investment in wealth so that the competitive equilibrium is efficient. Marriage market compe- tition also increases investments in small marriage markets relative to no competition, but equilibrium investments are not efficient.

Competing Pre-marital Investments

Pre-marital investments by spouses are largely viewed as public goods within the marriage. So individuals may underinvest. But individuals also use their investments to compete for spouses with higher investments. In a large marriage market, the higher equilibrium match quality obtained by increasing pre-marital investment exactly internalizes the external benefit of the investment so the competitive equilibrium is effcient. This model of competing investments in local public goods is a special case of Rosen's hedonic market model. In small marriage markets, the competition for spouses will raise incentives to invest in pre-marital investments as well as making these investments less predictable.

Information Externalities and Intermediaries in Frictional Search Markets

In frictional matching markets, buyers incur discrete inspection costs when assessing the suitability of goods on offer, and sellers incur discrete 'show' costs. This paper studies how intermediaries can help reduce these costs. Intermediaries, whose value derives from inventory, learning and memory, are shown to exist if goods are sufficiently heterogeneous. Intermediaries may either be firms that buy goods and hold inventory or brokers who search on behalf of their clients but do not buy or hold inventory. The parameter space, in terms of the ratio of inspection to show costs, naturally separates into two regions where firms exist versus where brokers exist.Information Externalities, Intermediaries, Search, Matching

Why Dowries?

Parents transfer wealth to their children in many ways. The dowry is distinctive because it is a large transfer made to a daughter at the time of her marriage. In an insightful essay, Goody (1973) proposed that the dowry is a premortem inheritance to the bride. A daughter obtains a wealth transfer from her parents as her dowry whereas a son obtains his as a bequest. His observation has been confirmed in different dotal (dowry giving) societies. We develop a theory of dowries that explains his observation. Our work builds on Becker's seminal research on marriage markets and the research program on economics of the family (Rosenzweig and Stark 1997). We argue that in virilocal societies, where married daughters leave the parental home and their married brothers do not, altruistic parents use dowries and bequests to solve a free riding problem between siblings. In virilocal societies, married sons continue to work with the family assets after their marriage. If married daughters share in the parents' bequests, the sons will not get the full benefits of their efforts in extending the family wealth. Thus they will supply too little effort. In order to mitigate this free riding problem, altruistic parents give bequests to sons and lump sum payments to daughters. The model predicts that dowry contracts, which may be complicated, should not contain claims on shares of income generated with the family assets. A theory of dowry has to explain its disappearance in previously dotal societies. As the labor market becomes more developed, as the demand for different types of workers grow, children are less likely to work in the same occupation as their parents. They are also less likely to work for or live with their families. The use of bequests to align work incentives within the family becomes less important. Since it is costly to pay a dowry, the demand for dowry (within the family) will fall as the need to use bequests exclusively for sons to align work incentives falls. Instead of the dowry, parents will transfer wealth to both their daughters and sons as bequests. So the development of labor markets will be important in reducing the role of dowries. We test our model of dowries with two types of evidence. The primary source of evidence comes from notarial deeds and the Florentine Catasto (census) of 1427 housed at the State Archives of Florence. The deeds record marriages in the Tuscan town of Cortona and fortyfour villages in its countryside between 1415 and 1436. The Florentine Catasto of 1427 supplied information on the paternal households of the brides and grooms. The model's prediction on contractual form is matched against the terms found in the marriage contracts. We merge the value of dowries from the marriage contracts to family characteristics found in the Catasto to test the model's predictions on family demographics and dowry values. Dotal marriages in medieval Cortona support the model presented here. In general, there is little data on the decline of dowries in a society due to the large time span of historical data needed to track its decline. A singular exception is the insightful study by Nazzari (1991) who studied the decline of dowries in Sao Paulo, Brazil, from 1600 to 1900. Although her theory is different from ours, the factors which Nazzari considered as responsible for the decline of dowries there are consistent with our model.

Estimating the Effects of Federal Research Funding on Universities using Alumni Representation on Congressional Appropriations Committees

This paper estimates the effects of federal research funding on 71 research universities. We focus on the number of and citations to articles published, patents issued, and faculty salaries. Using a panel data set that spans from 1972 to 1994, we control for potential endogeneity and omitted variables bias in our regressions by using a data set that links U.S. Congress members on the appropriations committee with their undergraduate alma mater. Alumni representation lowers the shadow price of federal funding. Using our preferred instrumental variables specification, we find an increase of $1 million in federal research funding (1993$) to a university results, on average, in 12 more articles, .34 more patents, and $152,015 more in total faculty salaries. Citations to articles publish falls by .08 citations. So when the shadow price of federal research funding falls, as a first approximation, universities buy more federal research funding and produce more but not necessarily higher quality research output.

Testing the Response of Consumption to Income Changes with (Noisy) PanelData

This paper tests the rational expectations lifecycle model of consumption against (1) a simple Keynesian model and (ii) the rational expectations lifecycle model with imperfect capital markets. The tests are based upon the relative responsiveness of consumption to income changes which can be predicted from past information and income changes which cannot be predicted. Since there is strong evidence that panel data contains substantial measurement error, the tests are especially constructed to allow for measurement error in the income process. They also allow for more general income processes than have been considered to date in the literature. The results reject the Keynesian model and generally support the lifecycle model, although the tests are not sufficiently precise to rule out the possibility that some households are liquidity constrained. Measurement error does have a strong influence on the relationship between consumption and income. When it is ignored our tests do not reject the Keynesian model. We show that consideration of measurement error may also reconcile differences in the results of Hall and Mishkin (1982) and Bernanke(1984). Nevertheless, our most important conclusion is that Hall and Mishkin's, Bernanke's, and Hayashi's (198 ) qualitative finding that the vast majority of households obey the lifecycle model is not an artifact of failure to account for measurement error in the income data.

How does the marriage market clear? An empirical framework

The paper surveys the Choo Siow (CS) marriage matching model and its extensions. CS derives a behavioral marriage matching function. The collective model of intra-household allocations can be integrated into this framework. Spousal labor supplies respond to changing marriage market conditions. Marriage market tightness, the ratio of unmarried type i men to unmarried type j women is a sufficient statistic for marriage market conditions for those types of individuals. The hypothesis that spousal labor supplies vary to equilibrate the marriage market has overidentifying restrictions. The framework extends to a dynamic marriage matching environment. Empirically, this paper shows how the famine caused by the great leap forward in Sichuan affected the marital behavior of famine born cohorts. Marriage market tightness is shown to be a useful statistic for summarizing marriage market conditions in the United States. Marriage market conditions in the contemporary United States primarily affect spousal labor force participation rather than hours of work.marriage, matching, collective model