The Added-Worker Effect: A Reappraisal

42 Pages Posted: 18 Aug 2004 Last revised: 8 Dec 2022

See all articles by Shelly J. Lundberg

Shelly J. Lundberg

University of California, Santa Barbara (UCSB); IZA Institute of Labor Economics; University of Bergen - Department of Economics

Date Written: July 1981

Abstract

In this paper, the added worker effect is interpreted as a response to uncertain returns to labour supply offers by members of a household. A model of household labour supply is developed In which each member's current labour force status affects the job search and participation decisions of the other and thus the probabilities of observed transitions between the states of employment, unemployment, and non-participation. The determinants of actual household transitions are then investigated using continuous employment histories for a sample of low-income families. Simulations using the estimated transition functions show that increased unemployment among married men has a sizeable short-run effect on both participation and employment of married women.

Suggested Citation

Lundberg, Shelly J., The Added-Worker Effect: A Reappraisal (July 1981). NBER Working Paper No. w0706, Available at SSRN: https://ssrn.com/abstract=349100

Shelly J. Lundberg (Contact Author)

University of California, Santa Barbara (UCSB) ( email )

South Hall 5504
Santa Barbara, CA 93106
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway