Quotation Riedl, Aleksandra, Schoiswohl, Florian. 2015. Is there an added worker effect? - European labor supply during the crisis. Focus on European Economic Integration 4, 71-88.


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Abstract

This paper analyzes the responsiveness of an individual’s labor supply to the job loss of his or her partner – the so-called “added worker effect (AWE).” While the bulk of empirical studies have utilized discrete choice models to identify its existence, we provide a macroeconomic indicator of the AWE in order to assess its economic significance for the labor force participation rate (LFPR). Our empirical analysis focuses on Europe in the period from 2002 to 2012, revealing that the AWE is negatively related to the business cycle and was particularly pronounced during the global financial crisis. While the LFPR increased by roughly 1 percentage point in Europe from 2009 to 2012, half of the effect is attributable to added workers. As our indicator is based on a rich micro dataset (European Labor Force Survey) we are also able to consistently present individual country results for nearly all EU Member States. Our analysis shows high increases in added workers in euro area countries that were strongly affected by financial market stress and in EU countries that experienced the bursting of housing bubbles. By contrast, we do not find an AWE in most Central and Eastern European countries.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Focus on European Economic Integration
Language English
Title Is there an added worker effect? - European labor supply during the crisis
Volume 4
Year 2015
Page from 71
Page to 88
Reviewed? Y
URL https://www.oenb.at/dam/jcr:f86b7f4e-b012-429f-90c8-8150888e366c/feei_2015_q4_studies_riedl_schoiswohl.pdf
DOI na
JEL J22, J64, J82

Associations

People
Schoiswohl, Florian (Former researcher)
External
Riedl, Aleksandra (Oesterreichische Nationalbank, Austria)
Organization
Institute for Economic Policy and Industrial Economics IN (Details)
Institute for Labor Economics IN (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
5300 Economics (Details)
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