NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Worker Displacement and the Added Worker Effect

Melvin Stephens Jr.

NBER Working Paper No. 8260
Issued in April 2001
NBER Program(s):   LS

This paper examines the effect of a husband's job loss on the labor supply of his wife, an effect known as the 'added worker' effect. Unlike past added worker effect studies which focus on the effect of the husband's current unemployment status, this paper analyzes the wife's labor supply response in the periods before and after her husband's job displacement in order to examine the short- and long-run adjustments to an earnings shock. Using the Panel Study of Income Dynamics, small pre-displacement effects are found along with larger and persistent post-displacement effects. The timing of the wives' responses differs by the type of displacement (plant closing vs. permanent layoff), possibly due to differences in the information wives acquire prior to the displacement. In addition, the response is found to increase with the magnitude of the husband's wage loss, to have changed over time (70's vs. 80's) and to vary by the husband's pre-displacement earnings. The long-run increases in the wife's labor supply account for over 25% of the husband's lost income.

download in pdf format
   (443 K)

email paper

This paper is available as PDF (443 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8260

Published: Stephens, Melvin, Jr. "Worker Displacement and the Added Worker Effect." Journal of Labor Economics 20, 3 (July 2002): 504-37.

Users who downloaded this paper also downloaded these:
Gruber and Cullen w5608 Spousal Labor Supply as Insurance: Does Unemployment Insurance Crowd Outthe Added Worker Effect?
Lundberg w0706 The Added-Worker Effect: A Reappraisal
Mincer Labor Force Participation of Married Women: A Study of Labor Supply
Finegan and Margo h0045 Added and Discouraged Workers in the Late 1930s: A Re-Examination
Charles and Stephens Jr. w8578 Job Displacement, Disability, and Divorce
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us