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Federal Reserve Bank of Philadelphia
Working Papers
Family Job Search and Wealth: The Added Worker Effect Revisited
J. Ignacio Garcia-Perez
Sílvio Rendon
Abstract

We develop and estimate a model of family job search and wealth accumulation. Individuals' job finding and job separations depend on their partners' job turnover and wages as well as common wealth. We fit this model to data from the Survey of Income and Program Participation (SIPP). This dataset reveals a very asymmetric labor market for household members, who share that their job finding is stimulated by their partners' job separation, particularly during economic downturns. We uncover a job search-theoretic basis for this added worker effect and find that this effect is stronger with more children in the household. We also show that excluding wealth and savings from the analysis and estimation leads to underestimating the interdependency between household members. Our analysis shows that the policy goal of supporting job search by increasing unemployment transfers is partially offset by a partner's lower unemployment and wages.


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J. Ignacio Garcia-Perez & Sílvio Rendon, Family Job Search and Wealth: The Added Worker Effect Revisited, Federal Reserve Bank of Philadelphia, Working Papers 16-34, 13 Dec 2016.
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Keywords: job search; asset accumulation; household economics; consumption; unemployment; estimation of dynamic structural models
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