Is marriage worthwhile? a study of investments and partnership formation in Spain, Germany and France

Marta Dominguez, Universidad Pompeu Fabra

This paper examines the nature of cohabitation and marriage in the light of the investments theory. According to this theory, marriage works as a way to secure joint investments (from childbearing to house acquisition) made by a couple, whereas cohabitation does not. This article proposes a causal mechanism to account for the relation between marriage and investments, which contradicts a generally assumed fact: that exit costs are higher in marriage. In this study it is argued that when important investments are made in the relationship, the costs of terminating cohabitation may be higher than those of divorcing. The hypothesis is tested through longitudinal regression models for first union formation and for the transition from cohabitation to marriage, using data from the FFS for Spain, Germany and France.