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The rise of the added worker effect

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  • Mankart, Jochen
  • Oikonomou, Rigas

Abstract

We document that the added worker effect (AWE) has increased over the last three decades. We develop a search model with two earner households and we illustrate that the increase in the AWE from the 1980s to the 2000s can be explained through (i) the narrowing of the gender pay gap, (ii) changes in the frictions in the labor market and (iii) changes in the labor force participation costs of married women.

Suggested Citation

  • Mankart, Jochen & Oikonomou, Rigas, 2016. "The rise of the added worker effect," Economics Letters, Elsevier, vol. 143(C), pages 48-51.
    • Handle: RePEc:eee:ecolet:v:143:y:2016:i:c:p:48-51
    DOI: 10.1016/j.econlet.2016.03.019
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    References listed on IDEAS

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    1. Jochen Mankart & Rigas Oikonomou, 2017. "Household Search and the Aggregate Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(4), pages 1735-1788.
    2. repec:hal:spmain:info:hdl:2441/8921 is not listed on IDEAS
    3. Stephen R. G. Jones & W. Craig Riddell, 1999. "The Measurement of Unemployment: An Empirical Approach," Econometrica, Econometric Society, vol. 67(1), pages 147-162, January.
    4. Christian Siegel, 2012. "Female Employment and Fertility - The Effects of Rising Female Wages," CEP Discussion Papers dp1156, Centre for Economic Performance, LSE.
    5. Jeremy Greenwood & Ananth Seshadri & Mehmet Yorukoglu, 2005. "Engines of Liberation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 109-133.
    6. Melvin Stephens, 2002. "Worker Displacement and the Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 504-537, July.
    7. Pietro Garibaldi & Etienne Wasmer, 2005. "Equilibrium Search Unemployment, Endogenous Participation, And Labor Market Flows," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 851-882, June.
    8. repec:hal:wpspec:info:hdl:2441/8921 is not listed on IDEAS
    9. David Bloom & David Canning & Günther Fink & Jocelyn Finlay, 2009. "Fertility, female labor force participation, and the demographic dividend," Journal of Economic Growth, Springer, vol. 14(2), pages 79-101, June.
    10. Robert Shimer, 2012. "Reassessing the Ins and Outs of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 127-148, April.
    11. Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.
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    Cited by:

    1. Amaia Altuzarra & Catalina Gálvez-Gálvez & Ana González-Flores, 2019. "Economic Development and Female Labour Force Participation: The Case of European Union Countries," Sustainability, MDPI, vol. 11(7), pages 1-18, April.
    2. Alexandre Ounnas, 2020. "Worker Flows, Occupations and the Dynamics of Unemployment and Labor Force Participation," LIDAM Discussion Papers IRES 2020009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Emilio Congregado & Ewa Galecka-Burdziak & Antonio A. Golpe & Robert Pater, 2021. "Separating aggregate discouraged and added worker effects: the case of a former transition country," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 729-760, September.
    4. Jan Gromadzki, 2019. "The Added Worker Effect, Employment Contracts, and the Reasons for the Wife’s Inactivity," IBS Working Papers 02/2019, Instytut Badan Strukturalnych.
    5. Francisco Perez‐Arce & María J. Prados, 2021. "The Decline In The U.S. Labor Force Participation Rate: A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 615-652, April.
    6. Bod’a, Martin & Považanová, Mariana, 2021. "Output-unemployment asymmetry in Okun coefficients for OECD countries," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 307-323.
    7. Connolly, Laura E. & Jolly, Nicholas A., 2024. "Temporal Changes to the Added Worker Effect Associated with Spousal Job Loss," GLO Discussion Paper Series 1454, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Heterogeneous agents; Family self insurance; Dual earner; Unemployment; Labor market search;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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