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Dowry and Wife's Welfare: A Theotrical and Empirical Analysis

Chinese University of Hong KongUniversity of Hong Kong

Becker attributes the existence of marital transfers to inflexibility in the division of joint product within the marriage. If that were the only reason, we would not have observed the coexistence of dowries and bride‐prices. This paper offers an alternative analysis. While Becker's interpretation is retained for bride‐prices, a dowry is now represented as a premortem bequest by altruistic parents for a daughter. It not only increases the wealth of the new conjugal household but also enhances the bargaining power of the bride in the allocation of the output within the household, thereby safeguarding here welfare. Using micro data from Taiwan, we found that a dowry improves the bride's welfare whereas a bride‐price has no effect. These empirical results support the theoretical predictions of the model.