Family Job Search and Wealth: The Added Worker Effect Revisited

By Silvio Rendon and J. Ignacio García-Pérez

http://d.repec.org/n?u=RePEc:red:sed018:503&r=dge

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. We also show that this effect is robust to having more children in the household, but that this effect and the interdependency between household members is underestimated if wealth and savings are not considered. Moreover, our analysis shows that the policy goal of supporting job search by increasing unemployment transfers is partially offset by the partner’s cross-effect in lower unemployment and wages.

Information is very important in job search, and this paper shows that this starts within the family. Of course, job risk within a couple leads to joint decisions about the job market, but the data here seems to indicate this goes beyond that.

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