Dimple KUKREJA will defend her thesis in economics on "Essays in Development Economics " Monday 3rd 2019, 3:00pm Room MF 323 (Manufacture des Tabacs)..
Supervisor : Matteo Bobba
Members ships are:
- Stéphnae STRAUB, Professor, Toulouse School of Economics
- Nishith PRAKASH, Professor, Connecticut University
- Guilhem CASSAN, Professeur, Namur University
- Matteo BOBBA, Professeur, Toulouse School of Economics
Abstract:
Labor Market Shocks and Evolution of Dowry Payments: Evidence from India
Anthropologists Boyd and Richerson (1988) write, “humans adjust their cultural phenotypes in response to their environments through learning and rational calculation” (p. 9). This paper explores if economic policy can change the incentives that allow cultural practices to persist. In particular, I examine if changes in labour market outcomes of men and women influence the size of the marriage payments from the bride to the groom in rural India. This question is of considerable importance for at least two reasons. First, research has shown that culture influences individual behaviour and significantly determines human capital investments, savings and gender norms. Therefore, from an academic perspective, it is important to analyze if economic shocks can change these cultural practices or if the effect flows only from culture to economic outcomes. Second, cultural traditions tend to be sticky over time. If cultural practices are welfare reducing then legislative bans alone may not be sufficient to re-align the incentives of the individuals and economic incentives may offer a better alternative to change these cultural expectations. Thus, from a policy perspective it is important to understand the extent to which changing the economic environment of individuals will affect these deeply rooted cultural institutions.
This paper focuses particularly on the custom of marriage payments or dowries in India. The literature on marriage payments and women’s economic contribution dates back to Boserup(1970) and was formalized in economic theory by Becker’s seminal price model in 1974 where the payments flow from the individual who gains more from marriage to the individual who gains less. While there exist many other theories on why dowries still exist in India, the empirical investigation of these theories have been limited by small and non-representative samples. Moreover, these empirical exercises remain agnostic about the labour market impacts on dowry. This is primarily because labour market outcomes are correlated to several individual characteristics like educational investments, that are also attractive in the marriage market, making it difficult to isolate their impact on dowry. In contrast to the previous research, I causally establish that a sufficient increase in the earning potential of women leads to a decrease in the burden of dowry on the bride’s family. I isolate the impact of the labour market channel on dowry by analyzing a market-based policy shock caused by the trade liberalization reforms of 1991. I investigate the reduced form effect of trade on labour market and marriage payments in the short-run. I focus on the size of the payments rather than the extensive margin as this cultural practice is embedded in the marriage rituals which tend to be sticky and hence difficult to change on the extensive margin in the short-run.
"I motivate my identification strategy using a two-period model where the parents determine the investments in their children and these investments determine their labour market outcomes and their quality in the marriage market. The transfer to the groom is a function of these qualities of the bride and the groom where the payments increase in the groom quality and decrease in the bride quality. An exogenous economic increase in the labour market value of women, therefore, will decrease these payments. The advantage of analyzing short-run changes is that the other pre-marital investments of the bride and the groom like years of schooling remain fixed for the cohorts entering the marriage market for a few years, after the trade shock, as they were determined in period 1. The finding that improvement in labour market value of women increases their marriage market value and leads to a fall in dowry payments is robust to a host of validity checks"
