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Does the added worker effect matter?

Author

Listed:
  • Nezih Guner

    (CEMFI)

  • Yuliya A. Kulikova

    (Banco de España)

  • Arnau Valladares-Esteban

    (University of St. Gallen and Sew)

Abstract

The added worker effect (AWE) measures the entry of individuals into the labor force due to their partners’ adverse labor market outcomes. We propose a new method to calculate the AWE that allows us to estimate its effect on any labor market outcome. The AWE reduces the fraction of households with two non-employed members by 16% for the 1977-2018 period; 28% in the 1990 recession and 23% during the great recession. The AWE also accounts for why women’s employment is much less cyclical and more symmetric than men’s. Without the AWE, married women’s employment would be as volatile as men and display negative skewness (declining quickly in recessions and recovering slowly in expansions). In recessions, while some women lose their employment, others enter the labor market and find jobs. This keeps female employment relatively stable.

Suggested Citation

  • Nezih Guner & Yuliya A. Kulikova & Arnau Valladares-Esteban, 2021. "Does the added worker effect matter?," Working Papers 2113, Banco de España.
    • Handle: RePEc:bde:wpaper:2113
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    References listed on IDEAS

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    3. Madeira, Carlos & Salazar, Leonardo, 2023. "The impact of monetary policy on a labor market with heterogeneous workers: The case of Chile," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 4(2).
    4. Coskun, Sena & Dalgic, Husnu C., 2024. "The emergence of procyclical fertility: The role of breadwinner women," Journal of Monetary Economics, Elsevier, vol. 142(C).
    5. 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).
    6. María del Pilar Toyos, 2022. "Cierre de escuelas en pandemia y brechas de género en Argentina: ¿madres más vulnerables?," Asociación Argentina de Economía Política: Working Papers 4603, Asociación Argentina de Economía Política.
    7. Stefania Albanesi & Maria Jose Prados, 2022. "Slowing Women’s Labor Force Participation: The Role of Income Inequality," Working Papers 2022-037, Human Capital and Economic Opportunity Working Group.

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    More about this item

    Keywords

    added worker effect; household labor supply; intra-household insurance; female employment; cyclicality; skewness;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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