Working Paper: CEPR ID: DP13247
Authors: Martin Halla; Julia Schmieder; Andrea Weber
Abstract: We study the effectiveness of intra-household insurance among married couples when the husband loses his job due to a mass layoff or plant closure. Empirical results based on Austrian administrative data show that husbands suffer persistent employment and earnings losses, while wives' labor supply increases moderately due to extensive margin responses. Wives' earnings gains recover only a tiny fraction of the household income loss and, in the short-term, public transfers and taxes are a more important form of insurance. We show that the presence of children in the household is a crucial determinant of the wives' labor supply response.
Keywords: job displacement; family dynamics; spousal labor supply; intrahousehold insurance; added worker effect
JEL Codes: D19; J22; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Job displacement (J63) | Husbands' employment and earnings losses (J12) |
| Job displacement (J63) | Wives' labor supply increase (D13) |
| Husbands' earnings shock (J31) | Wives' labor supply response (D13) |
| Presence of children (J13) | Wives' labor supply response (D13) |
| Wives' earnings gains (J31) | Household income loss coverage (G52) |
| Public transfers and taxes (H29) | Household income insurance (G52) |