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Spousal Insurance, Precautionary Labor Supply, and the Business Cycle - A Quantitative Analysis

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  • Kathrin Ellieroth

    (Indiana University Bloomington)

Abstract

I document that aggregate hours worked and employment are significantly less cyclical for married women than for married men and single women. Married women are less likely to leave the labor force and are more attached to employment in recessions. Furthermore, I show that men have a strongly countercyclical job loss probability. Using a two-person household model with labor market frictions, I show that married women exhibit precautionary labor supply in response to the higher threat of job loss experienced by their husband in recessions and thus, offer spousal insurance. The cyclicality of men’s job loss probability accounts for the majority of married women’s low cyclicality of employment.

Suggested Citation

  • Kathrin Ellieroth, 2019. "Spousal Insurance, Precautionary Labor Supply, and the Business Cycle - A Quantitative Analysis," 2019 Meeting Papers 1134, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:1134
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    References listed on IDEAS

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    Cited by:

    1. Kim, Jiyeon, 2021. "Searching for the Cause of the Gender Gap in Employment Losses during the COVID-19 Crisis," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 43(2), pages 53-79.
    2. Coskun, Sena & Dalgic, Husnu C., 2024. "The emergence of procyclical fertility: The role of breadwinner women," Journal of Monetary Economics, Elsevier, vol. 142(C).
    3. Albanesi, Stefania & Kim, Jiyeon, 2021. "The Gendered Impact of the COVID-19 Recession on the US Labor Market," CEPR Discussion Papers 15838, C.E.P.R. Discussion Papers.
    4. 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.
    5. Campos-Vazquez, Raymundo M. & Esquivel, Gerardo & Ghosh, Priyasmita & Medina-Cortina, Eduardo, 2023. "Long-lasting effects of a depressed labor market: Evidence from Mexico after the great recession," Labour Economics, Elsevier, vol. 81(C).
    6. María Jose Luengo-Prado, 2021. "COVID-19 and the Labor Market Outcomes for Prime-Aged Women," Current Policy Perspectives 90899, Federal Reserve Bank of Boston.
    7. Chiara Ludovica Comolli, 2021. "Couples' paid work, state-level unemployment, and first births in the United States," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 45(38), pages 1149-1184.
    8. Riccardo Leoncini & Mariele Macaluso & Annalivia Polselli, 2023. "Gender Segregation: Analysis across Sectoral-Dominance in the UK Labour Market," Papers 2303.04539, arXiv.org, revised Dec 2023.

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