rules<sup>5</sup> (Clark (2000), Bhalotra and van Soest (2008), Jensen (2012), Rosenblum (2013)) and (b) because the former are more likely to practice sex-selective abortions at higher parities (Almond and Edlund (2008), Abrevaya (2009), Bhalotra and Cochrane (2010)).<sup>6</sup> So, instead of comparing boy- and girl-families, we compare firstborn-girl (FG) and firstborn-boy (FB) families, as the former face a higher future dowry expense, on average, due to the greater number of daughters. While it is not obvious that total dowry expense should be higher for parents who have more daughters,<sup>7</sup> in our data, as we show later, an increase in the number of daughters significantly increases total dowry paid by parents and does not affect dowry paid per daughter.

To test if the differences between FG and FB families that we study are due to dowry and not due to other factors, we exploit the variation in expected dowry amounts. We regress the outcome variables on the interaction of FG dummy and expected dowry, thus testing if outcomes vary by expected dowry even within FG families. We assume that parents form expectations about dowry amounts by observing dowries paid by brides or received by grooms in their child’s marriage market around the time of their child’s birth, where we define a child’s marriage market by its caste and state.<sup>8</sup> For a child born in a given year, we define expected dowry as the average net dowry paid by brides or received by grooms from the same caste and state as the child and who married during the year of the child’s birth or the prior four years. We also utilize alternate definitions of expected dowry for robustness checks.

We construct a retrospective panel data set on dowries from the 2006 round of the Rural Economic and Demographic Survey (REDS). Note that, although the first set of interviews in the 2006 REDS were conducted in 2006, 84 percent of the interviews took place in 2008. In addition to data on marriage payments, REDS collected rich information on various forms of savings at the household level and on individual labor supply that we utilize. REDS has numerous advantages over other Indian data sets that have been used in the dowry literature that we discuss further in Section 2.

Our findings emphasize the crucial role of traditional cultural institutions like dowry in determining economic behavior. We find that the prospect of higher future dowry increases current savings. In particular, as expected dowry increases, FG families significantly increase per capita and total annual savings, both overall and relative to FB families. We also investigate the plausible channels that a household can use to finance the higher savings: (1) lower consumption, (2) increased income, and (3) increased debt. We do not observe any change in total consumption expenditure on items that REDS collected data on. However, we find that fathers of firstborn girls

> 5A son-biased stopping rule means that parents are more likely to stop childbearing after a male relative to a female birth.

> 6We note that prenatal sex-detection has been illegal in India in public facilities since 1976 and in private facilities since 1994.

> 7For instance, parents who have more daughters may give less dowry per daughter while incurring the same total expense as parents with fewer daughters.

> 8See Section 3 for more details on why this is a reasonable way to define a marriage market.

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