 Joint search over the life cycleAnnika Bacher, Philipp Grübener and Lukas Nord Journal of Monetary Economics, 2025, vol. 150, issue C Abstract: This paper provides evidence that the added worker effect – labor force entry upon spousal job loss – is stronger for young than old households. Using a life cycle model of two-member households in a frictional labor market, we study whether this age-dependency is driven by heterogeneous needs for or availability of spousal insurance. Our framework endogenizes asset and human capital accumulation, as well as arrival rates of job offers, and is disciplined against U.S. micro data. Counterfactuals show a strong complementarity across both margins: A large added worker effect requires both high spousal earnings potential relative to the primary earner and limited access to other means of self-insurance. Together, both margins account for the observed age differential in the added worker effect. The model predicts substantial crowding out of spousal labor supply responses by unemployment benefit extensions among young households, in line with their stronger insurance motive. Keywords: Unemployment; Search; Added worker effect; Life cycle; Family insurance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:150:y:2025:i:c:s0304393224001491 DOI: 10.1016/j.jmoneco.2024.103696 Access Statistics for this article Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser More articles in Journal of Monetary Economics from Elsevier |
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