Does Household Labor Supply Insure Against Income Shocks?

Yongsung Chang, Elin Halvorsen () and Marios Karabarbounis
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Elin Halvorsen: https://www.ssb.no/en/forskning/ansatte/elin-halvorsen

Richmond Fed Economic Brief, 2026, vol. 26, issue 06

Abstract: A household has various means for insuring against a primary income loss, including increasing the spouse's labor supply. However, increasing spousal labor supply does not apply across all incomes, and that is why it is difficult to detect in the data. Our recent working paper "Spousal Labor Response to Primary Income: Identification and Heterogeneity" isolates income shocks that are unexpected and uncorrelated among spouses, both of which are key properties for uncovering the true strength of the spousal labor supply mechanism.

Keywords: household and consumer finance; employment and labor markets (search for similar items in EconPapers)
Date: 2026
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