Family Welfare and the Cost of Unemployment

61 Pages Posted: 2 Oct 2017 Last revised: 21 Oct 2019

See all articles by Julie L. Hotchkiss

Julie L. Hotchkiss

Federal Reserve Bank of Atlanta; Georgia State University - Department of Economics

Robert Elijah Moore

Georgia State University - Andrew Young School of Policy Studies

Fernando Rios‐Avila

Bard College - The Levy Economics Institute

Date Written: 2017-09-01

Abstract

This paper calculates the cost of an unemployment shock in terms of family welfare. We find that, overall, families face an average annualized expected dollar equivalent welfare loss of $1,156 when the unemployment rate rises by 1 percentage point. The average welfare loss for married families is greater than for single families and increases with education. We then estimate that a 1.8 percent shock to purchasing power would generate the same amount of overall welfare loss as a one-percentage-point rise in the unemployment rate.

Keywords: family welfare, joint labor supply, microsimulation dual mandate, monetary policy

JEL Classification: D19, E52, I30, J22

Suggested Citation

Hotchkiss, Julie L. and Moore, Robert Elijah and Rios‐Avila, Fernando, Family Welfare and the Cost of Unemployment (2017-09-01). FRB Atlanta Working Paper No. 2017-7. Available at SSRN: https://ssrn.com/abstract=3046125

Julie L. Hotchkiss (Contact Author)

Federal Reserve Bank of Atlanta ( email )

Research Department
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Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
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Robert Elijah Moore

Georgia State University - Andrew Young School of Policy Studies ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-651-3756 (Phone)
404-651-4985 (Fax)

Fernando Rios‐Avila

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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