Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/108519 
Authors: 
Year of Publication: 
2015
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 740
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
This paper examines the added worker effect (AWE), which refers to the increase of labor supply of individuals in response to a sudden financial shock in family income, that is, unemployment of their partner. While previous empirical studies focus on married women's response to those shocks, I explicitly analyze the spillover effects of unemployment on both women and men and I also differentiate according to their partnership status (marriage vs. cohabitation). My aim is to evaluate whether intra-household adaptation mechanisms differ by gender and by partnership status. The underlying method is a difference-in-differences setting in combination with an entropy balancing matching procedure. The paper considers plant closures and employer terminations as exogenous forms of unemployment. Using longitudinal data from the German Socio-Economic Panel (SOEP) study from 1991 through 2013, the empirical investigation finds evidence of the existence of an AWE. The effect is largest when a woman enters unemployment and is mainly driven by changes on the intensive margin (increase of hours).
Subjects: 
added worker effect
plant closure
unemployment
entropy balancing
intra-household adaptation
JEL: 
D13
J12
J22
Document Type: 
Working Paper

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