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Added worker effect during the Great Recession: evidence from Italy

Author

Listed:
  • Emanuela Ghignoni
  • Alina Verashchagina

Abstract

Purpose - The purpose of this paper is to check the existence of the added worker effect (AWE) in Italy during the Great Recession. Design/methodology/approach - The authors used the Bank of Italy Survey on Household Income and Wealth to study factors driving the change in female work status over the period 2006-2012. The probit model was used to identify the timing, significance and the magnitude of the AWE. The authors also performed panel estimates to understand how women, positioned at either extensive or intensive margins, respond to the reduction in male hours of work which appear to be crucial for the AWE to manifest. Findings - The authors find that with the crisis progressing, Italian women respond ever less to the reduction in male earnings, at the same time they become more responsive to the job loss by male partner which is the worst outcome. This means that the AWE survives, even if only in cases of serious hardship. It also remains when the reduction in male incomes is coupled with the reduction in their hours of work, suggesting that the redistribution of household chores is an important prerequisite for women to get into work. Originality/value - This paper provides evidence on the AWE in Italy during the Great Recession. The authors took into account the peculiarity of the Italian labour market whose performance was affected by the use of the Wage Supplementation Fund. It masks part of the AWE when the standard methodology is used. By looking at the reduction in male earnings with or without a change in their work hours, the authors were able to reveal additional channels through which the AWE operates in Italy.

Suggested Citation

  • Emanuela Ghignoni & Alina Verashchagina, 2016. "Added worker effect during the Great Recession: evidence from Italy," International Journal of Manpower, Emerald Group Publishing, vol. 37(8), pages 1264-1285, November.
  • Handle: RePEc:eme:ijmpps:ijm-05-2015-0071
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    Citations

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    Cited by:

    1. Ángel L. Martín‐Román & Jaime Cuéllar‐Martín & Alfonso Moral, 2020. "Labor supply and the business cycle: The “bandwagon worker effect”," Papers in Regional Science, Wiley Blackwell, vol. 99(6), pages 1607-1642, December.
    2. Silvia Fedeli & Vitantonio Mariella & Marco Onofri, 2018. "Determinants of Joblessness During the Economic Crisis: Impact of Criminality in the Italian Labour Market," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(2), pages 559-588, September.
    3. French, Declan & Vigne, Samuel, 2019. "The causes and consequences of household financial strain: A systematic review," International Review of Financial Analysis, Elsevier, vol. 62(C), pages 150-156.
    4. Jan Gromadzki, 2019. "The Added Worker Effect, Employment Contracts, and the Reasons for the Wife’s Inactivity," IBS Working Papers 02/2019, Instytut Badan Strukturalnych.
    5. Moreno-Maldonado, C. & Jiménez-Iglesias, A. & Camacho, I. & Rivera, F. & Moreno, C. & Matos, M.G., 2020. "Factors associated with life satisfaction of adolescents living with employed and unemployed parents in Spain and Portugal: A person focused approach," Children and Youth Services Review, Elsevier, vol. 110(C).
    6. Lina Cardona‐Sosa & Luz Adriana Flórez & Leonardo Fabio Morales & Banco de la República, 2018. "How does the Household Labour Supply Respond to the Unemployment of the Household Head?," LABOUR, CEIS, vol. 32(4), pages 174-212, December.

    More about this item

    Keywords

    Gender; Italy; Unemployment; Crisis; Added worker effect; Inactivity; D10; J16; J22;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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