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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
Abstract

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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