Impact of Informal Institutions on Population Wealth in Developing Countries (on the Example of Weddings in Tajikistan)

The institutional theory explains the poverty and low economic growth rate of emerging countries through the underdevelopment of formal institutions. However, not only legal rules shape processes in the society but also customs and traditions. Some of them appear to be irrational and thus detrimental to people’s well-being. Much of the research on institutions in developing world focuses primarily on the critics of traditional principles of behaviour or the comparison of two kinds of regulations ignoring the policy suggestions. This study extends the line of research by exploiting the case of weddings in Tajikistan. To prevent an increase of the households’ indebtedness, the Tajik government limited the amount of money spent on weddings organization. The quantitative analysis of the influence the government restrictions have on emigration reveals significant negative correlation between these two variables. Nevertheless, the formal institutions cannot diminish the impact of traditions on economic indicators as the Tajik law affected only medium-income households abandoning poor population. The findings of this work seek to contribute both to further institutional theory research and policy-making strategies in the third world. Keywords: institutions, informal institutions, developing countries, emigration