Who picks up the slack? Understanding spousal responses to unemployment spells

Laura Kawano, Sara LaLumia, Shanthi Ramnath and Michael Stevens

Labour Economics, 2025, vol. 96, issue C

Abstract: We use a large panel of married households to update estimated added worker effects. In response to a primary earner’s job loss, secondary earners are 1.1 to 2.4 percentage points more likely to work and compensate for 3.6 to 5.1 percent of the displaced worker’s lost earnings. When a secondary earner is displaced, spousal employment is unchanged but there is a substantial earnings reduction. These small compensatory responses are explained by an increased probability that the nondisplaced spouse exits employment, either through correlated unemployment shocks or retirement. Conditional on relative-earner status, sex-based differences in added worker effects are small.

Keywords: Added worker effect (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:96:y:2025:i:c:s0927537125000569

DOI: 10.1016/j.labeco.2025.102732

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