The Employment Effects of Recession on Couples in the UK: Women's and Household Employment Prospects and Partners’ Job Loss

Abstract

The effect that the 2008/09 recession has had on unemployment and, in particular, on the distribution of job losses across households is of key concern to policymakers. During the 1991 recession rising male unemployment was associated with a sharp increase in the number of workless households, with this polarisation of work between 'work-rich' and 'work-poor' persisting many years later. Part of the reason for this polarisation was that the design of the tax and benefit system produced weak work incentives for women partnered to unemployed men, particularly if the jobs open to them were either part time or low paid. Since 1999, the United Kingdom has undertaken reform of employment and transfer programmes, with a particular focus on boosting incomes and work incentives for families with children. The resulting literature focussed on the impact that these reforms had on women's movements into employment. Since the economy entered recession in 2008, an increasingly important question is how have these reforms affected women's decisions to remain in employment (or enter into work) if their partner becomes unemployed. This paper uses Labour Force Survey data to assess the effect of male job loss on their partners' employment and to examine the implications for the distribution of jobs across households. Results suggest that working women whose partners lost their jobs in the 2008/09 recession were more likely to remain in work than before and this has helped to mediate the growth in workless couple households. IntroductionEconomic recession tests the efficacy of social policy with rising unemployment in particular threatening to increase both the incidence and depth of poverty and leaving long-term scarring effects. In the UK, the policy regime that was in place in 2008/09 differed greatly from that of 1991 and the consequent effects of recession on employment and poverty are likely to differ too. This paper considers the effect that the recent recession in the UK has had on women who are married or cohabiting with men, a group termed here as 'partnered women'.

Couples' Labour Supply Responses to Job Loss: Growth and Recession Compared

“…This evidence of positive AWEs on the intensive margin is consistent with evidence from the few previous studies that include dual‐earner couples (e.g. Gong, ; Harkness and Evans, ).…”

“…Following their partner's job loss during the growth period, women are 1.8pp more likely to quit, but during the recession they are 0.9pp less likely to quit their job. In other words, the reverse (voluntary quit) AWE is overturned during recession as households seek to maintain their labour market attachment (consistent with previous UK evidence reported by Harkness and Evans, ).…”

“…The dominant explanation for these ‘reverse’ AWEs is the disincentive effect of means‐tested benefits when a partner loses their job. As Harkness and Evans () note, the benefit system in the UK has been reformed in recent years to ‘make work pay’; nevertheless, even in their study covering 2006–9 they still find a husband's nonemployment is associated with a lower probability of his partner being in work (although a partner already in work is more likely to increase her hours).…”

“…This represented a major shock to households that affected both male and female earners. To our knowledge, only one previous study (Harkness and Evans, ) has looked at UK couples’ labour supply reactions during the Great Recession, and this looked only at the first phase of the downturn (2008–9), which was dominated by men's job losses . We provide a longer view by considering the recession and subsequent period of stagnation up until 2011.…”

Who brings home the bacon? The influence of context on partners' contributions to the household income

“…The number of female-breadwinner families increased during the 2008 economic crisis, especially in those countries particularly hard hit by the recession such as Greece and Spain (Vitali and Mendola 2014;Klesment and Van Bavel 2015;Cory and Stirling 2015). Some authors have argued that the increase in the prevalence of female-breadwinner couples is directly linked to the rise in male unemployment (Smith 2009;Harkness and Evans 2011;Bettio et al 2012).…”