Temporal Changes to the Added Worker Effect Associated with Spousal Job Loss

This paper utilizes the 1968-2019 survey waves of the Panel Study of Income Dynamics to analyze the added worker effect for wives of husbands who lose their job through no fault of their own. Specifically, we focus on the potential changes to the added worker effect over time. For wives who were non-employed prior to their husbands' job loss, our results show that the added worker effect has declined over time; the effect is U-shaped for wives working part-time pre-displacement. Further, heterogeneity exists across age groups. The added worker effect is largest and more persistent across decades for women who are relatively younger at the time of their husbands' job loss, ages 20-39. Although the magnitude of the added worker effect declined from the 1970s to the 2000s, it is still a mechanism through which households adjust to spousal job loss, particularly part-time working wives shifting to full-time employment. Finally, displaced husbands are increasingly more likely to be employed part-time following their own displacement.