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Key Findings Details

The Insurance Role of Household Labor Supply for Older Workers
Yanan Li and Victoria Prowse
WP 2014-309

  • Following the husband losing his job, the wife’s likelihood of employment increases in younger households, but not in older households.
  • In older households, the likelihood of the wife being unemployed increases following the husband’s job loss.
  • Our findings are consistent with older women being constrained by the labor market in the extent to which they can adjust their labor supply to mitigate the effects of spousal employment shocks, and suggest that spousal labor supply is not an effective intra-household insurance device for older households. These findings point to the particular importance of social insurance programs, such as Social Security and Disability Insurance, for older households.