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The Added-Worker Effect: A Reappraisal

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  • Shelly J. Lundberg
Abstract
In this paper, the added worker effect is interpreted as a response to uncertain returns to labour supply offers by members of a household. A model of household labour supply is developed In which each member's current labour force status affects the job search and participation decisions of the other and thus the probabilities of observed transitions between the states of employment, unemployment, and non-participation. The determinants of actual household transitions are then investigated using continuous employment histories for a sample of low-income families. Simulations using the estimated transition functions show that increased unemployment among married men has a sizeable short-run effect on both participation and employment of married women.

Suggested Citation

  • Shelly J. Lundberg, 1981. "The Added-Worker Effect: A Reappraisal," NBER Working Papers 0706, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0706
    Note: LS
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    References listed on IDEAS

    as
    1. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 347-368, September.
    2. Ashenfelter, Orley & Heckman, James J, 1974. "The Estimation of Income and Substitution Effects in a Model of Family Labor Supply," Econometrica, Econometric Society, vol. 42(1), pages 73-85, January.
    3. Stephen T. Marston, 1976. "Employment Instability and High Unemployment Rates," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(1), pages 169-210.
    4. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey: Part I," Economic Inquiry, Western Economic Association International, vol. 14(2), pages 155-189, June.
    5. Toikka, Richard S, 1976. "A Markovian Model of Labor Market Decisions by Workers," American Economic Review, American Economic Association, vol. 66(5), pages 821-834, December.
    6. Keeley, Michael C, et al, 1978. "The Estimation of Labor Supply Models Using Experimental Data," American Economic Review, American Economic Association, vol. 68(5), pages 873-887, December.
    7. Tuma, Nancy Brandon & Robins, Philip K, 1980. "A Dynamic Model of Employment Behavior: An Application to the Seattle and Denver Income Maintenance Experiments," Econometrica, Econometric Society, vol. 48(4), pages 1031-1052, May.
    8. Jacob Mincer, 1962. "Labor Force Participation of Married Women: A Study of Labor Supply," NBER Chapters, in: Aspects of Labor Economics, pages 63-105, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Tchai Tavor & Limor Dina Gonen & Uriel Spiegel, 2022. "The Double-Peaked Shape of the Laffer Curve in the Case of the Inverted S-Shaped Labor Supply Curve," Mathematics, MDPI, vol. 10(6), pages 1-19, March.
    2. Alfonso Novales & Belén Mateos, 1990. "Empleo, capital humano y participación femenina en España," Investigaciones Economicas, Fundación SEPI, vol. 14(3), pages 457-478, September.

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