status at the time of marriage. The results are presented in panels (A) to (C) of Table 4A. Note that even when control variables are added to the regression, women who marry their fi rst-cousins or other relatives are 6—7 percentage points less likely to bring a dowry and the effect is generally statistically signi fi cant. Considering that in this population, about 35 percent of all women report the payment of a dowry at the time of marriage, this is a substantial and important difference. It is interesting that marriage to non-kin within a village (Table 4A, panel (C)) is not related to the payment of dowry in any statistically signi fi cant way. Again, we interpret this as evidence that marriage to a non-relative within the same village and marriage to a cousin are rather different. The reduction in dowry has more to do with the particular form of social capital that is associated with kinship rather than just familiarity and trust that come from residing in close proximity. In Table 4B, we use the logarithm of the dowry values as an alternate dependent variable and obtain similar results as in Table 4A. After controlling for time fi xed-effects, and other individual characteristics, the results show 20 percent lower dowry values among consanguineous unions.

The relationship between dowry and consanguinity over time can be observed in Figure 3. Note that dowries in Matlab have been increasing, but the practice of consanguinity has been falling. The rise in dowries can be explained by our model: in a setting where improvements in transportation and communication allow individuals to search over greater distances for matches with higher social distances (than consanguineous marriages or same-village marriages), the problem of ex-ante commitment becomes greater and is solved by the payment of higher levels of dowry. This is also a possible explanation for the rise in the prevalence of dowry in India (Tambiah, 1973; Rao, 1993).<sup>23</sup> We hope to explore this issue in future work. In any event, the vital importance of a reduced dowry in the context of a consanguineous marriage emerges from the formal tests of our theoretical model.

# 4.3 Consanguinity, Dowries and Wealth

To understand the role of wealth and credit constraints in contracting consanguinous marriages, we begin by examining the bivariate relationships between consanguinous marriage, dowry and measures of wealth at the time of marriage. Since the 1996 MHSS is a cross-sectional survey, information on pre-marital wealth levels is rather limited. Our fi rst proxy is simply the value of father’s landholdings. Since land markets in rural South Asia are known to be thin (UNDP, 2000), we rely on measures of current landholdings (or landholdings at the time of father’s death) as a proxy for past landholdings. If current landholdings are affected by marital contracts, this measure will be an imperfect measure of socio-economic status. To deal with this issue, we also consider a meaure of father’s education. To the extent that a father’s education is determined before his children marry, this measure will be a good proxy for permanent income and/or socio-economic status of a household. In some places we simply consider a dummy variable that indicates whether a father completed primary school.

Bivariate kernel density estimates for consanguinous marriage (as de fi ned by being married to a fi rst-cousin or another relative) and measures of wealth are presented in Figure 4. Note that the relationship is non-monotonic: the practice of consanguinous marriage is higher at the two extremes of the wealth distribution than in the middle, as predicted by our theoretical model. The robustness of this relationship is econometrically explored in Table 5A. Note that the incidence of consanguinous

> <u>23</u> The demographic transition may have been an additional factor that may have contributed to the decrease in fi rst-cousin marriage and the rising popularity of dowry. The reduction in family size in conjunction with prescribed spousal age differences, could have resulted in the non-availability of fi rst-cousin spouses. We are grateful to Alan Bittles for alerting us to this possibility.

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