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Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
Family Welfare and the Cost of Unemployment
Julie L. Hotchkiss
Robert E. Moore
Fernando Rios-Avila

This paper calculates the cost of an unemployment shock in terms of family welfare. We find that, overall, families face an average annualized expected dollar equivalent welfare loss of $1,156 when the unemployment rate rises by 1 percentage point. The average welfare loss for married families is greater than for single families and increases with education. We then estimate that a 1.8 percent shock to purchasing power would generate the same amount of overall welfare loss as a one-percentage-point rise in the unemployment rate.

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Julie L. Hotchkiss & Robert E. Moore & Fernando Rios-Avila, Family Welfare and the Cost of Unemployment, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2017-7, 01 Sep 2017, revised 01 Jul 2019.
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Keywords: family welfare; joint labor supply; microsimulation dual mandate; monetary policy
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