Family Welfare and the Cost of Unemployment
61 Pages Posted: 2 Oct 2017 Last revised: 29 Apr 2020
Date Written: 2017-09-01
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
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