Working Paper, Brown University, Department of Economics 2011-12
Abstract. If women marry younger than men, increased population growth causes a surplus of women in the marriage market. This paper introduces search frictions into a matching model with transferable utility and age-dependent match payoffs to study if this so-called marriage squeeze has caused a dowry inflation in India. Using data from Karnataka it is shown that the observed shifts in the age distributions and sex ratio of unmarried men and women during the marriage squeeze lead to higher dowries conditional on the partners' ages. A GMM estimate of the model parameters suggests that average dowries have increased as well.