IDEAS home Printed from https://ideas.repec.org/p/fip/fedpwp/16-34.html
   My bibliography  Save this paper

Family Job Search and Wealth: The Added Worker Effect Revisited

Author

Listed:
  • J. Ignacio Garcia-Perez
  • Sílvio Rendon

Abstract

We develop and estimate a model of family job search and wealth accumulation. Individuals' job finding and job separations depend on their partners' job turnover and wages as well as common wealth. We fit this model to data from the Survey of Income and Program Participation (SIPP). This dataset reveals a very asymmetric labor market for household members, who share that their job finding is stimulated by their partners' job separation, particularly during economic downturns. We uncover a job search-theoretic basis for this added worker effect and find that this effect is stronger with more children in the household. We also show that excluding wealth and savings from the analysis and estimation leads to underestimating the interdependency between household members. Our analysis shows that the policy goal of supporting job search by increasing unemployment transfers is partially offset by a partner's lower unemployment and wages.

Suggested Citation

  • J. Ignacio Garcia-Perez & Sílvio Rendon, 2016. "Family Job Search and Wealth: The Added Worker Effect Revisited," Working Papers 16-34, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:16-34
    as

    Download full text from publisher

    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2016/wp16-34.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rendon Sílvio, 2006. "Job Search And Asset Accumulation Under Borrowing Constraints ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 233-263, February.
    2. Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2016. "Female Labor Supply, Human Capital, and Welfare Reform," Econometrica, Econometric Society, vol. 84, pages 1705-1753, September.
    3. Jochen Mankart & Rigas Oikonomou, 2017. "Household Search and the Aggregate Labour Market," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1735-1788.
    4. Rasmus Lentz & Torben Tranas, 2005. "Job Search and Savings: Wealth Effects and Duration Dependence," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 467-490, July.
    5. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
    6. Ek Susanne & Holmlund Bertil, 2010. "Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-27, May.
    7. Dale T. Mortensen, 1977. "Unemployment Insurance and Job Search Decisions," ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
    8. Costas Meghir & Renata Narita & Jean-Marc Robin, 2015. "Wages and Informality in Developing Countries," American Economic Review, American Economic Association, vol. 105(4), pages 1509-1546, April.
    9. Rasmus Lentz, 2009. "Optimal Unemployment Insurance in an Estimated Job Search Model with Savings," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 37-57, January.
    10. Melvin Stephens, 2002. "Worker Displacement and the Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 504-537, July.
    11. Richard Blundell & Pierre-Andre Chiappori & Thierry Magnac & Costas Meghir, 2007. "Collective Labour Supply: Heterogeneity and Non-Participation," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 417-445.
    12. Stefania Marcassa, 2014. "Unemployment Duration of Spouses: Evidence From France," LABOUR, CEIS, vol. 28(4), pages 399-429, December.
    13. Gorgens, Tue, 2002. "Reservation wages and working hours for recently unemployed US women," Labour Economics, Elsevier, vol. 9(1), pages 93-123, February.
    14. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    15. Carroll, Christopher D., 2006. "The method of endogenous gridpoints for solving dynamic stochastic optimization problems," Economics Letters, Elsevier, vol. 91(3), pages 312-320, June.
    16. Guler, Bulent & Guvenen, Fatih & Violante, Giovanni L., 2012. "Joint-search theory: New opportunities and new frictions," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 352-369.
    17. Albrecht, James & Anderson, Axel & Vroman, Susan, 2010. "Search by committee," Journal of Economic Theory, Elsevier, vol. 145(4), pages 1386-1407, July.
    18. Sílvio Rendon & Alfredo Cuecuecha, 2010. "International job search: Mexicans in and out of the US," Review of Economics of the Household, Springer, vol. 8(1), pages 53-82, March.
    19. Laura Pilossoph, 2016. "Assortative Matching and Income Inequality: A Structural Approach," 2016 Meeting Papers 1239, Society for Economic Dynamics.
    20. Browning,Martin & Chiappori,Pierre-André & Weiss,Yoram, 2014. "Economics of the Family," Cambridge Books, Cambridge University Press, number 9780521795395.
    21. Naoki Aizawa & Hanming Fang, 2020. "Equilibrium Labor Market Search and Health Insurance Reform," Journal of Political Economy, University of Chicago Press, vol. 128(11), pages 4258-4336.
    22. Haomin Wang, 2019. "Intra-Household Risk Sharing and Job Search over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 34, pages 165-182, October.
    23. repec:hal:spmain:info:hdl:2441/4ra95789n9nrr59b6lmini6tp is not listed on IDEAS
    24. Hwang, Hae-shin & Mortensen, Dale T & Reed, W Robert, 1998. "Hedonic Wages and Labor Market Search," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 815-847, October.
    25. Pierre-Andre Chiappori & Maurizio Mazzocco, 2017. "Static and Intertemporal Household Decisions," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 985-1045, September.
    26. Flabbi, Luca & Moro, Andrea, 2012. "The effect of job flexibility on female labor market outcomes: Estimates from a search and bargaining model," Journal of Econometrics, Elsevier, vol. 168(1), pages 81-95.
    27. Jeremy Lise, 2013. "On-the-Job Search and Precautionary Savings," Review of Economic Studies, Oxford University Press, vol. 80(3), pages 1086-1113.
    28. Luca Flabbi & James Mabli, 2018. "Household Search or Individual Search: Does It Matter?," Journal of Labor Economics, University of Chicago Press, vol. 36(1), pages 1-46.
    29. Mark Aguiar & Erik Hurst & Loukas Karabarbounis, 2012. "Recent Developments in the Economics of Time Use," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 373-397, July.
    30. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    31. Laura Pilossoph & Shu Lin Wee, 2021. "Household Search and the Marital Wage Premium," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(4), pages 55-109, October.
    32. James Costain, 1997. "Unemployment insurance with endogenous search intensity and precautionary saving," Economics Working Papers 243, Department of Economics and Business, Universitat Pompeu Fabra.
    33. Dey, Matthew & Flinn, Christopher, 2008. "Household search and health insurance coverage," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 43-63, July.
    34. Flinn, C. & Heckman, J., 1982. "New methods for analyzing structural models of labor force dynamics," Journal of Econometrics, Elsevier, vol. 18(1), pages 115-168, January.
    35. James Mabli & Luca Flabbi, 2010. "Household Search or Individual Search: Does it Matter? Evidence from Lifetime Inequality Measures," 2010 Meeting Papers 507, Society for Economic Dynamics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Family Job Search and Wealth: The Added Worker Effect Revisited
      by Christian Zimmermann in NEP-DGE blog on 2018-10-10 14:51:53

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joaquín Serrano & Leonardo Gasparini & Mariana Marchionni & Pablo Glüzmann, 2019. "Economic cycle and deceleration of female labor force participation in Latin America," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-21, December.
    2. Christine Braun & Charlie Nusbaum & Peter Rupert, 2021. "Labor Market Dynamics and the Migration Behavior of Married Couples," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 42, pages 239-263, October.
    3. Valeria Rueda & Guillaume Wilemme, 2021. "Career Paths with a Two-Body Problem: Occupational Specialization and Geographic Mobility," Upjohn Working Papers 21-346, W.E. Upjohn Institute for Employment Research.
    4. Hanming Fang & Andrew J. Shephard, 2019. "Household Labor Search, Spousal Insurance, and Health Care Reform," NBER Working Papers 26350, National Bureau of Economic Research, Inc.
    5. Almeida, Eloiza R.F. & Araújo, Veneziano & Gonçalves, Solange L., 2022. "Urban wage premium for women: evidence across the wage distribution," World Development, Elsevier, vol. 159(C).
    6. Joanna Venator, 2022. "Dual-Earner Migration Decisions, Earnings, and Unemployment Insurance," Boston College Working Papers in Economics 1052, Boston College Department of Economics.
    7. Josiah Hickson & Joseph Marshan, 2022. "Labour Market Effects of Bushfires and Floods in Australia: A Gendered Perspective," The Economic Record, The Economic Society of Australia, vol. 98(S1), pages 1-23, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guler, Bulent & Guvenen, Fatih & Violante, Giovanni L., 2012. "Joint-search theory: New opportunities and new frictions," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 352-369.
    2. Luca Flabbi and James Mabli, 2012. "Household Search or Individual Search: Does It Matter? Evidence from Lifetime Inequality Estimates," Working Papers gueconwpa~12-12-03, Georgetown University, Department of Economics.
    3. Fernández-Blanco, Javier, 2022. "Unemployment risks and intra-household insurance," Journal of Economic Theory, Elsevier, vol. 203(C).
    4. Haomin Wang, 2019. "Intra-Household Risk Sharing and Job Search over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 34, pages 165-182, October.
    5. Gabriella Conti & Rita Ginja, Renata Narita, 2018. "The Value of Health Insurance: A Household Job Search Approach," Working Papers, Department of Economics 2018_18, University of São Paulo (FEA-USP).
    6. Andrey Launov & Klaus Wälde, 2013. "Estimating Incentive And Welfare Effects Of Nonstationary Unemployment Benefits," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(4), pages 1159-1198, November.
    7. Bobba, Matteo & Flabbi, Luca & Levy, Santiago & Tejada, Mauricio, 2021. "Labor market search, informality, and on-the-job human capital accumulation," Journal of Econometrics, Elsevier, vol. 223(2), pages 433-453.
    8. Hie Joo Ahn & Ling Shao, 2017. "Precautionary On-the-Job Search over the Business Cycle," Finance and Economics Discussion Series 2017-025, Board of Governors of the Federal Reserve System (U.S.).
    9. Naoki Aizawa & Hanming Fang, 2020. "Equilibrium Labor Market Search and Health Insurance Reform," Journal of Political Economy, University of Chicago Press, vol. 128(11), pages 4258-4336.
    10. Ji, Yan, 2021. "Job Search under Debt: Aggregate Implications of Student Loans," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 741-759.
    11. Núria Quella & Silvio Rendon, 2014. "The Interaction between Job Search and Housing Decisions," 2014 Meeting Papers 1222, Society for Economic Dynamics.
    12. Guner, Nezih & Kulikova, Yuliya & Valladares-Esteban, Arnau, 2020. "Does the Added Worker Effect Matter?," IZA Discussion Papers 12923, Institute of Labor Economics (IZA).
    13. Sebastian Galiani & Juan Pantano, 2021. "Structural Models: Inception and Frontier," NBER Working Papers 28698, National Bureau of Economic Research, Inc.
    14. Hanming Fang & Andrew J. Shephard, 2019. "Household Labor Search, Spousal Insurance, and Health Care Reform," NBER Working Papers 26350, National Bureau of Economic Research, Inc.
    15. Flórez, Luz A., 2017. "Informal sector under saving: A positive analysis of labour market policies," Labour Economics, Elsevier, vol. 44(C), pages 13-26.
    16. Bloemen, Hans, 2021. "Labor Market Transitions of Members of Opposite-Sex Couples: Nonparticipation, Unemployed Search, and Employment," IZA Discussion Papers 14673, Institute of Labor Economics (IZA).
    17. Luca Flabbi & Mauricio Tejada, 2022. "Working and Saving Informally: The Link between Labor Market Informality and Financial Exclusion," CHILD Working Papers Series 105 JEL Classification: J, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    18. Naoki Aizawa & Hanming Fang, 2015. "Equilibrium Labor Market Search and Health Insurance Reform, Second Version," PIER Working Paper Archive 15-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 28 Jun 2015.
    19. Chaumont, Gaston & Shi, Shouyong, 2022. "Wealth accumulation, on-the-job search and inequality," Journal of Monetary Economics, Elsevier, vol. 128(C), pages 51-71.
    20. Valladares-Esteban, Arnau & Choi, Sekyu, 2016. "On households and unemployment insurance," Discussion Paper Series In Economics And Econometrics 1508, Economics Division, School of Social Sciences, University of Southampton.

    More about this item

    Keywords

    job search; asset accumulation; household economics; consumption; unemployment; estimation of dynamic structural models;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedpwp:16-34. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Beth Paul (email available below). General contact details of provider: https://edirc.repec.org/data/frbphus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.