father. Thus, FG parents attempt to finance the higher savings through higher earnings.

**Borrowing.** In Panel A of Table 9, we examine if there is also a corresponding rise in debt for FG families relative to FB families due to expected dowry. Column (1) shows that for average expected dowry (=INR 26,120), FG families are 6 percentage points more like to have borrowed the year before the survey, although we lose significance once caste-state-year fixed effects are included. In the absence of dowry expectations, FG families are _less_ likely to have borrowed than FB families. Each INR 10,000 rise in expected dowry raises the likelihood of borrowing in a year by 3 percentage points for FG families.

Like employment, REDS also has data on the borrowing history of each household. However, more than 90 percent of the loans in the data were taken out during seven years before the survey, suggesting that there is serious recall bias in the historical loan data. Keeping this caveat in mind, we use specification (4) to estimate the effect on total amount borrowed by FG families each year, relative to FB families, to finance future dowry. We restrict the sample to 1980-2008 to minimize recall bias. Panel B of Table 9 shows that the triple-interaction coefficient is positive (though insignificant) implying that borrowing post-birth is larger in FG families as expected dowry rises.

On the whole, we find that FG families finance the increased savings after the birth of their daughter by increasing fathers’ labor supply and by borrowing somewhat more.

# **6 Discussion**

The birth of a daughter in dowry-paying societies, such as India, implies an almost certain increase in parents’ future expenditure. Faced with such a lumpy expense, one way parents of daughters could finance dowries is through borrowing around the time of marriage. Indeed, in our data, households are more likely to borrow during the year of marriage than otherwise. The likelihood that a household applied for a loan (formal or informal) in the year before the survey is significantly higher if a marriage took place in the household during the same year than if it did not (47 percent versus 18 percent). The corresponding numbers for borrowing specifically for marriage or ornaments are 32 percent in households where a marriage took place last year versus 0.54 percent in households where no marriage occurred last year.<sup>38</sup> However, parents may be unable to borrow the entire amount necessary for dowry and other marriage-related expenses at the time of marriage due to credit constraints that are likely to be substantial in rural India.

An alternative way to raise liquidity for dowry is, therefore, saving in advance. Saving for dowry was prevalent even in medieval Florence. In 1425, Cosimo de’ Medici established _Monte Delle Doti_ or Dowry Bank, a public fund that sought to assist families in accumulating adequate dowries. The fund accrued a guaranteed interest rate on deposits made upon the birth of a daughter that could be withdrawn after an agreed number of years to become the daughter’s dowry (Frick (2011), Strathern (2015), Franklin (2017)). Our results above have established that, indeed, households

> 38The average likelihood of borrowing in the year before the survey is 19 percent for any loan and 1.49 percent for a loan for marriage or ornaments.

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