The added worker effect of married women in Greece during the Great Depression

This paper investigates the wife’s labour supply responses to their husband’s job loss during the economic crisis in Greece. Using data from the Labour Force Survey (2007-2014) we explicitly identify the labour market transitions of both spouses within the household. We found that women whose husbands involuntarily separated from their jobs have increased their participation into the labour market, confirming the theoretical predictions of the added worker effect. However, this result is not accompanied by higher employment rates. In fact, those women entering the labour market as a reaction to husband’s joblessness become unemployed. These findings intensify as crisis deepens. Our results have significant policy implications for the shadow wages of married women in Greece.