We study the efficiency of premarital investments when parents care about their child’s marriage prospects, in a large frictionless marriage market with nontransferable utility. Stochastic returns to investment ensure that equilibrium is unique. We find that, generically, investments exceed the Pareto-efficient level, unless the sexes are symmetric in all respects. Girls will invest more than boys if their quality shocks are less variable than shocks for boys or if they are the abundant sex. The unique equilibrium in our continuum agent model is the limit of the equilibria of finite models, as the number of agents tends to infinity.

We analyze premarital investments in human capital and housing when individuals are unable to make binding commitments to share their labor income with a prospective spouse. Investments are distorted if there are gender differences in bargaining power over own labor income or marriage market imbalances. Distortions are magnified when ex ante bargaining power favors one sex (e.g., women in China) and ex post bargaining power favors the other (e.g., men in China), since parents of boys will increase housing investments in order to credibly commit to share more resources with the boy’s potential wife, possibly crowding out human capital investments.