Beauty Premium and Marriage Premium in Search Equilibrium: Theory and Empirical Test

We propose a theoretical explanation for the so-called “beauty premium”. Our approach relies entirely on search frictions and the fact that physical appearance plays an important role in attracting a marriage partner. We analyse the interaction between frictional labour and marriage markets, making use of what we label constrained job search. The optimal strategy entails different reservation wages for different men, and we establish the existence of a search equilibrium characterised by beauty premium and/or marriage premium. Predicted profiles of premia allow for potential falsification tests and point to relevant empirical evidence in support of our theory.