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Family Welfare and the Cost of Unemployment

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Abstract

This paper calculates the cost of an unemployment shock in terms of family welfare. We find that, overall, families face an average annualized expected dollar equivalent welfare loss of $1,156 when the unemployment rate rises by 1 percentage point. The average welfare loss for married families is greater than for single families and increases with education. We then estimate that a 1.8 percent shock to purchasing power would generate the same amount of overall welfare loss as a one-percentage-point rise in the unemployment rate.

Suggested Citation

  • Julie L. Hotchkiss & Robert E. Moore & Fernando Rios-Avila, 2017. "Family Welfare and the Cost of Unemployment," FRB Atlanta Working Paper 2017-7, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:2017-07
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    More about this item

    Keywords

    family welfare; joint labor supply; microsimulation dual mandate; monetary policy;
    All these keywords.

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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