Pierre André Chiappori (Columbia) "Family Economics" - Cemmap

9
Investment in Schooling and
the Marriage Market
The purpose of this chapter is to provide a simple equilibrium framework
for the joint determination of pre-marital schooling and marriage patterns
of men and women. 1 Couples sort according to education and, therefore,
changes in the aggregate supply of educated individuals affects who marries
whom and the division of the gains from marriage. Unlike other attributes
such as race and ethnic background, schooling is an acquired trait
that is subject to choice. Acquiring education yields two different returns:
First, a higher earning capacity and better job opportunities in the labor
market. Second, an improvement in the intra-marital share of the surplus
one can extract in the marriage market. Educational attainment influences
intra-marital shares by raising the prospects of marriage with an educated
spouse and thus raising household income upon marriage, and by affecting
the competitive strength outside marriage and the spousal roles within
marriage.
The gains from schooling within marriage strongly depend on the decisions
of others to acquire schooling. However, since much of schooling
happens before marriage, partners cannot coordinate their investments.
Rather, men and women make their choices separately, based on the anticipation
of marrying a “suitable” spouse with whom schooling investments
are expected to generate higher returns. Therefore, an equilibrium framework
is required to discuss the interaction between marriage and schooling.
Such a framework can address some interesting empirical issues. For instance,
it is well documented that the market return to schooling has risen,
especially in the second half of the 20th century. Thus, it is not surprising
that women’s demand for education has risen. What is puzzling, however,
is the different response of men and women to the changes in the returns to
schooling. Women still receive lower wages in the labor market and spend
more time at home than men, although these gaps have narrowed over
time. Hence, one could think that women should invest in schooling less
than men, because education appears to be less useful for women both at
home and in the market. In fact, while women considerably increased their
investment in education in the last four decades, men hardly responded to
the higher returns to schooling since the 1970s, eventually enabling women
1 This chapter is based on Chiappori, Iyigun and Weiss (2009).
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