Intra-household labour supply after an unemployment event: The added worker effect

Lina Cardona-Sosa, Luz Florez and Leonardo Morales

Borradores de Economia from Banco de la Republica de Colombia

Abstract: In this paper we explore one of the oldest labour market phenomena documented in the literature: the added worker effect, which refers to the labour supply response of secondary workers to main earners´ job losses. To do so we take advantage of the panel data survey conducted by a Colombian Foundation, Fedesarrollo between 2007 and 2010, using a fixed effects model to account for household´s specific time invariant unobserved heterogeneity. Our results suggest that when the head of the household becomes unemployed, the labour force participation rate of their female partner increases between 9 and 20 percentage points. Such response appears during the first six months of household head´s unemployment. In addition, within one year of the head of the family becoming unemployed, their children are more likely to enter the labour market and less likely to be in tertiary education.

Keywords: unemployment; labour force participation; labour supply; fixed effects (search for similar items in EconPapers)
JEL-codes: J20 J22 J38 (search for similar items in EconPapers)
Pages: 35
Date: 2016-06
New Economics Papers: this item is included in nep-dem
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:944

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