The added worker effect over the business cycle: evidence from urban Mexico

This paper investigates whether the added worker effect is an important determinant of the increased labour force participation by women and whether the magnitude of the added worker effect differs between the peak and trough of the business cycle. Use is made of repeated observations from spouses in urban Mexico, collected during the Peso crisis (1994:4-1995:4) and during the period of economic prosperity (1998:4-1999:4). Significant added worker effects are found in both periods. The magnitude of the added worker effect during the crisis period is found to be twice as large as that observed during the period of economic prosperity.