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This paper takes Becker efficient marriage market hypothesis at face value, and directly confronts it with data from Hong Kong. The theory of optimal assignment is used to develop an empirical model of spouse selection, which resembles a Tobit model. This model can address positive or negative assortative matching as well as marginal product pricing in marriage markets. We also use a computer algorithm to solve the assignment problem for imputed marital output. The degree to which the actual pairing of husbands and wives corresponds to the optimal pairing provides a goodness-of-fit test of the efficient marriage market hypothesis. (JEL C51, C61, C78, J12)
This paper takes Gary Becker's theory of marriage seriously. In his seminal paper, Becker [1973] proposes an invisible hand theorem for the marriage market. He argues that the competition for spouse leads men and women to be matched in such a way that maximizes the sum total of marital output. Applications of the economic approach to marriage are now commonplace. Becker et al. [1977] study the effect of imperfect information on divorce. Benham [1974], Scully [1979] and Wong [ 1986] estimate the effect of wife's education on husband's earnings. Grossbard-Shechtman [1993] and Rao [1993] focus on the effect of sex ratio on (implicit or explicit) bride prices or dowries. The literature, however, has virtually ignored Becker's hypothesis that marriage markets maximize total marital output, i.e., that marriage markets are efficient.
Mistakes are no doubt made in marriage decisions. The marriage market is not a textbook example of perfect competition because of elaborate social norms, substantial search costs, and room for bargaining and opportunistic behavior. Nevertheless, we intend to push Becker's efficient marriage market model at face value, and directly confront it with data. The hypothesis that the marriage market maximizes marital output provides a framework that allows estimating a model of spouse selection which recovers some of the parameters of the production function for marital output. Using the estimated parameters, we can use programming techniques to find the optimal male-female pairing that maximizes the sum of marital output. The degree to which the actual pairing of husbands and wives corresponds to the optimal pairing provides a goodness-of-fit test of the efficient marriage market hypothesis. Our method is applied to census...