Husband’s Unemployment and Wife’s Labor Supply – The Added Worker Effect across Europe

This paper investigates the responsiveness of women’s labor supply to their husband’s loss of employment – the so-called added worker effect. While previous empirical literature on this topic mainly concentrates on a single country, we take an explicit internationally comparative perspective and analyze whether the added worker effect varies across the European countries. In doing so, we use longitudinal data from the European Union Statistics on Income and Living Conditions (EU-SILC) covering the period 2004 to 2011. For our pooled sample of 28 European countries, we find evidence for the existence of an added worker effect, both at the extensive and at the intensive margin of labor supply. Women whose husbands become unemployed have a higher probability of entering the labor market and changing from part-time to full-time employment than women whose husbands remain employed. However, our results further reveal that the added worker effect varies over both the business cycle and the different welfare regimes within Europe.