A Human Capital-Based Theory of Post-Marital Residence Rules

Abstract

In pre-modern societies the residence of a newly-wedded couple is often decided by custom. While researchers have analyzed factors leading to particular post-marital residence patterns, no one has explained why a society should have a customary rule in the first place. Our theory stems from contracting problems created by the nature of pre-marriage human capital investments. We argue that a fixed post-marital residence rule may solve a hold-up problem by specifying marriage terms and limiting possibilities for renegotiation; the trade-off is the rule may prohibit beneficial renegotiation of post-marital location. We compare alternative residence rules (or lack thereof) under different degrees of location specificity of human capital and environmental uncertainty. We apply our theoretical results to Murdock's (1967) 862-society data set, augmented with climate data. We find some predictive ability in variables related to outside options, control over the environment, and potential degree of social control.