The Added-Worker Effect: A Reappraisal

Shelly Lundberg

No 706, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, the added worker effect is interpreted as a response to uncertain returns to labour supply offers by members of a household. A model of household labour supply is developed In which each member's current labour force status affects the job search and participation decisions of the other and thus the probabilities of observed transitions between the states of employment, unemployment, and non-participation. The determinants of actual household transitions are then investigated using continuous employment histories for a sample of low-income families. Simulations using the estimated transition functions show that increased unemployment among married men has a sizeable short-run effect on both participation and employment of married women.

Date: 1981-07
Note: LS
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Published as Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.

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