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

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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.

Suggested Citation

  • Lina Cardona-Sosa & Luz Adriana Flórez & Leonardo Morales Zurita, 2016. "Intra-household labour supply after an unemployment event: The added worker effect," Borradores de Economia 944, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:944
    DOI: 10.32468/be.944
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    1. Medina, Daniel & Morales, Leonardo Fabio, 2019. "Fluidez del mercado laboral y resultados en materia de empleo en Colombia: evidencia derivada de datos enlazados de empleadores y empleados," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.

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    More about this item

    Keywords

    unemployment; labour force participation; labour supply; fixed effects;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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