Job Displacement, Family Dynamics, and Spousal Labor Supply

Abstract

We study the effectiveness of intrahousehold insurance among married couples when the husband loses his job due to a mass layoff or plant closure. Empirical results based on Austrian administrative data show that husbands suffer persistent employment and earnings losses, while wives’ labor supply increases moderately due to extensive margin responses. Wives’ earnings gains recover only a tiny fraction of the household income loss, and in the short-term, public transfers and taxes are a more important form of insurance. We show that the presence of children in the household is a crucial determinant of the wives’ labor supply response. (JEL D13, J12, J16, J22, J31, J63)

Losing in a boom: Long-term consequences of a local economic shock for female labour market outcomes

“…show that household income following disability insurance receipt is unchanged as spousal labour supply adjusts. While Stephens (2002) shows that spousal labour supply responds substantially following displacement in the United States, Halla et al (2019) find less scope for household labour supply adjustments following job displacement in Austria. In contrast, structural estimation of a life-cycle model emphasizes the importance of household labour supply adjustments in smoothing adverse shocks (Blundell et al, 2016).…”

Does the added worker effect matter?

“…12 See, for example, Stephens (2002), Juhn and Potter (2007), Mankart and Oikonomou (2016), Halla, Schmieder, and Weber (2018), and Bredtmann, Otten, and Rul (2018).…”

“…First, the paper builds on the empirical literature on the AWE. Lundberg (1985), Stephens (2002), Juhn and Potter (2007), Halla, Schmieder, and Weber (2018), and Bredtmann, Otten, and Rul (2018), are examples from this literature. While these papers exclusively focus on how women's labor force participation respond to job loss by their husbands, our method allows us to study the impact of the AWE on a wider set of labor market outcomes.…”

Fired and Pregnant: Gender Differences in Job Flexibility Outcomes after Job Loss

“…While studies on the US traditionally focus on displacement effects on wages and earnings (Jacobson et al, 1993;Stevens, 1997;Couch and Placzek, 2010;Davis et al, 2011;Krolikowski, 2018), studies on European countries tend to assess the displacement effects on employment and wages (Eliason and Storrie, 2006;Huttunen et al, 2011;Ichino et al, 2017;Huttunen et al, 2018;Halla et al, 2018). In the European context, employment is arguably a more important margin of adjustment because of the more centralized wage system (Kuhn, 2002).…”