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How Do Families and Unattached Individuals Respond to Layoffs? Evidence from Canada

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  • Morissette, René
  • Ostrovsky, Yuri

Abstract

Using data from a large Canadian longitudinal dataset, we examine whether earnings of wives and teenagers increase in response to layoffs experienced by husbands. We find virtually no evidence of an “added worker effect†for the earnings of teenagers. However, we find that among families with no children of working age, wives’ earnings offset about one-fifth of the earnings losses experienced by husbands five years after the layoff. We also contrast the long-term earnings losses experienced by husbands and unattached males. Even though the former group might be less mobile geographically than the latter, we find that both groups experience roughly the same earnings losses in the long run. Furthermore, the income losses (before tax and after tax) of both groups are also very similar. However, because unattached males have much lower pre-layoff income, they experience much greater relative income shocks than (families of) laid-off husbands.

Suggested Citation

  • Morissette, René & Ostrovsky, Yuri, 2009. "How Do Families and Unattached Individuals Respond to Layoffs? Evidence from Canada," CLSSRN working papers clsrn_admin-2009-49, Vancouver School of Economics, revised 25 Sep 2009.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2009-49
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    File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2040%20-%20Morissette%20and%20Ostrovsky.pdf
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    References listed on IDEAS

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    Cited by:

    1. Giannakopoulos, Nicholas, 2015. "The added worker effect of married women in Greece during the Great Depression," MPRA Paper 66298, University Library of Munich, Germany.
    2. Javier Fernandez-Blanco, 2017. "Unemployment Risks and Intra-Household Insurance," 2017 Meeting Papers 478, Society for Economic Dynamics.

    More about this item

    Keywords

    Job Loss; Layoffs; Income instability; Labour supply; Earnings disruption; Employment Insurance benefits; Tax system;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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