Job Displacement, Family Dynamic, and Spousal Labor Supply

81 Pages Posted: 22 Oct 2018

See all articles by Martin Halla

Martin Halla

Johannes Kepler University Linz - Department of Economics; IZA Institute of Labor Economics

Julia Schmieder

German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Andrea Weber

Vienna University of Economics and Business; Austrian Institute of Economic Research (WIFO); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 2018

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.

Keywords: Added Worker Effect, Firm Events, Household Labor Supply, Intra-household Insurance

JEL Classification: D19, J22, J6

Suggested Citation

Halla, Martin and Schmieder, Julia and Weber, Andrea Michaela, Job Displacement, Family Dynamic, and Spousal Labor Supply (October 2018). CEPR Discussion Paper No. DP13247. Available at SSRN: https://ssrn.com/abstract=3270923

Martin Halla (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria

IZA Institute of Labor Economics

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

Julia Schmieder

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

IZA Institute of Labor Economics ( email )

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

Andrea Michaela Weber

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Institute for the Study of Labor (IZA)

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

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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