Family Job Search and Wealth: The Added Worker Effect Revisited

44 Pages Posted: 14 Dec 2016

See all articles by J. Ignacio Garacia-Perez

J. Ignacio Garacia-Perez

Universidad Pablo de Olavide - Department of Economics

Sílvio Rendon

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Date Written: 2016-12-13

Abstract

We develop and estimate a model of family job search and wealth accumulation. Individuals' job finding and job separations depend on their partners' job turnover and wages as well as common wealth. We fit this model to data from the Survey of Income and Program Participation (SIPP). This dataset reveals a very asymmetric labor market for household members, who share that their job finding is stimulated by their partners' job separation, particularly during economic downturns. We uncover a job search-theoretic basis for this added worker effect and find that this effect is stronger with more children in the household. We also show that excluding wealth and savings from the analysis and estimation leads to underestimating the interdependency between household members. Our analysis shows that the policy goal of supporting job search by increasing unemployment transfers is partially offset by a partner's lower unemployment and wages.

Keywords: job search, asset accumulation, household economics, consumption, unemployment, estimation of dynamic structural models

JEL Classification: C33, E21, E24, J64

Suggested Citation

Garcia-Perez, J. Ignacio and Rendon, Silvio, Family Job Search and Wealth: The Added Worker Effect Revisited (2016-12-13). FRB of Philadelphia Working Paper No. 16-34, Available at SSRN: https://ssrn.com/abstract=2885202

J. Ignacio Garcia-Perez (Contact Author)

Universidad Pablo de Olavide - Department of Economics ( email )

Ctra. Utrera, Km.1
Sevilla, Seville 41010
Spain

HOME PAGE: http://www.upo.es/econ/garcia/

Silvio Rendon

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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