On households and unemployment insurance

Abstract

We study unemployment insurance in a framework where the main source of heterogeneity among agents is the type of household they live in: some agents live alone while others live with their spouses as a family. Our exercise is motivated by the fact that married individuals can rely on spousal income to smooth labor market shocks, while singles cannot. We extend a version of the standard incompletemarkets model to include two-agent households and calibrate it to the US economy with special emphasis on matching differences in labor market transitions across gender and marital status as well as aggregate wealth moments. Our central finding is that changes to the current unemployment insurance program are valued differently by married and single households. In particular, a more generous unemployment insurance reduces the welfare of married households significantly more than that of singles and vice versa. We show that this result is driven by the amount of self-insurance existing in married households, and thus, we highlight the interplay between self-and government-provided insurance and its implication for policy.

Household Decisions and the Gender Gap in Job Satisfaction

“…Foged (2016), Braun et al (2021), andAverkamp et al (2024) show how the rational decisions of households can magnify gender discrepancies in pay, even when differences in most payrelated attributes have become minimal. 3 Our analysis aligns with the latter approach, providing a rationale for the gender gap in job satisfaction through the lens of rational 3 In a broader context, considering labor-supply decisions in dual-earner households as interdependent and collective choices of household members has advanced our understandings of consumption insurance against wage shocks (e.g., Autor et al, 2019;Blundell et al, 2016;Wu & Krueger, 2021), the intertemporal elasticity of labor supply (e.g., Bredemeier et al, 2019Bredemeier et al, , 2023, the determinants of female labor supply (e.g., Bick, 2016;Bick & Fuchs-Schündeln, 2017Bredemeier & Jüßen, 2013;Guner et al, 2012aGuner et al, , 2012b, unemployment insurance (e.g., Choi & Valladares-Esteban, 2020;Ortigueira & Siassi, 2013), and pension systems (e.g., Groneck & Wallenius, 2020;Nishiyama, 2019). Empirical evidence for the collective approach to modeling labor supply is provided by, e.g., Cherchye et al (2012) and Donni and Moreau (2007).…”

A spouse and a house are all we need? Housing demand, labor supply and divorce over the lifecycle

“…This observation is relevant for the debate on how the optimal level of public insurance (e.g., unemployment benefits) depends on the self-insurance value. (Choi and Valladares-Esteban, 2020) Next we study the individual welfare effects of a significant but transitory drop in housing prices. We find that particularly single women, regardless of whether they own or rent a property, are most likely to incur welfare costs of such sudden changes in housing value.…”