Couples’ Response to Job Loss: Boom and Recession Compared

We examine whether couples in the UK increase labour supply to cushion the fall in earnings from a job loss, comparing periods of growth and recession. We consider both male and female earners and various dimensions of labour supply adjustment. We find evidence of labour supply reactions, but they can be negative as well as positive, particularly at the extensive margin. During the recession, household reactions are either unchanged or couples increase their labour market attachment, with bigger positive reactions and smaller negative ones. People do not react in advance of job losses, suggesting that unemployment is a surprise.

Bryan M., Longhi S. (2018) Couples’ Response to Job Loss: Boom and Recession Compared, The Manchester School, 86(3) 333-357.