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Female Labor Supply As Insurance Against Idiosyncratic Risk

Author

Listed:
  • Orazio Attanasio

    (University College London and Institute for Fiscal Studies,)

  • Hamish Low

    (University of Cambridge and Institute for Fiscal Studies,)

  • Virginia Sánchez-Marcos

    (Universidad de Cantabria,)

Abstract

In this paper, we explore the role of female labor supply as an insurance mechanism against idiosyncratic earnings risk within the family. We use a life-cycle model in which a unitary family makes consumption, saving, and labor supply decisions. Additional uncertainty increases female participation rates. This effect on participation is greatest when the ability to borrow (and hence to smooth consumption) is limited. We calculate the welfare cost of increases in uncertainty and show that the welfare cost is greater when households are unable to adjust female labor supply. (JEL: J22, D91) Copyright (c) 2005 The European Economic Association.

Suggested Citation

  • Orazio Attanasio & Hamish Low & Virginia Sánchez-Marcos, 2005. "Female Labor Supply As Insurance Against Idiosyncratic Risk," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 755-764, 04/05.
    • Handle: RePEc:tpr:jeurec:v:3:y:2005:i:2-3:p:755-764
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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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