and Rose (1998) and Rose (2000) who examined the association between female birth, savings, consumption, parents’ time allocation, and income in India, but they did not show that dowry was the underlying mechanism for their findings. We are the first study that estimates the causal impact of dowry on household savings and parental labor supply in a causal manner.

Our findings are also relevant to the literature on barriers to savings in low-income countries. Household savings are a crucial determinant of welfare, especially in developing countries, where credit and insurance markets are imperfect. Although the relationship between marriage and savings has been previously recognized,<sup>10</sup> we highlight a hitherto under-appreciated motive for savings in dowry-paying societies. Finally, we make a modest contribution to the large literature on income and consumption smoothing (Morduch (1995)). Our finding that households use savings and adjust labor supply to smooth the negative income shock due to dowry is consistent with classical life-cycle and permanent income models (Franco and Brumberg (1954), Friedman (1957), Campbell (1987), Jappelli and Pistaferri (2010)).

# **2 Data and Descriptive Statistics**

We use the most recent, 2006 round of REDS. REDS is a nationally representative survey of rural Indian households first carried out in 1968. Uniquely among household surveys, REDS collects detailed information on savings and marriage payments, along with data on labor supply and other economic and demographic variables.

## **2.1 Sample-selection criteria**

We restrict our sample to households that have unmarried individuals under the age of 18 (the minimum age at marriage for women in India) at the time of the survey since this is the group for which our research question is relevant. In addition, we impose several other restrictions that are either necessitated by our research question or the conceptual framework underlying the identification strategy. For instance, we restrict our sample to nuclear families, i.e., families where all children belong to the same set of parents, because financial decision-making in joint families may be very different. As a result, our findings do not apply to joint households. A detailed explanation for why we need to impose these restrictions is in Appendix B, where we also show that they do not significantly alter the composition of households in our final estimation sample in terms of caste, religion, below the poverty line (BPL) status, land ownership, household size, and household consumption expenditure.

> 10Horioka (1987) describes that future marriage-related expenses are cited as a significant reason for household savings in Japan. Wei and Zhang (2011), Du and Wei (2013), and Horioka and Terada-Hagiwara (2016) find evidence for marriage-related competitive saving motive in China, the Republic of Korea, and India, wherein parents’ savings respond to the marriage market sex ratios faced by their children. Tertilt (2005) examines the relationship between polygyny and savings in Sub-Saharan Africa and Grossbard (2015) theoretically examines how marriage affects employment, savings, and consumption.

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