Discussion Paper Details

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Title: Job Displacement, Family Dynamic, and Spousal Labor Supply

Author(s): Martin Halla, Julia Schmieder and Andrea Weber

Publication Date: October 2018

Keyword(s): Added Worker Effect, Firm Events, Household Labor Supply and Intra-household Insurance

Programme Area(s): Labour Economics and Public Economics

Abstract: We study the effectiveness of intra-household 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.

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Bibliographic Reference

Halla, M, Schmieder, J and Weber, A. 2018. 'Job Displacement, Family Dynamic, and Spousal Labor Supply'. London, Centre for Economic Policy Research.