Added Worker Effects in Canada: The Effect of Spousal Job Loss on Transitions into Employment

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Résumé (français)

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Résumé (anglais)

We examine added worker effects in Canada using the Labour Force Survey. At the extensive margin, we find that married women who are not employed are more likely to enter employment the month after a spouse has lost a job. Spousal job loss does not affect women’s transition into employment in later months, and there are no significant effects for men. The effects do not appear to represent a behavioural response to an exogenous or unexpected spousal layoff. Rather, the women most likely to move in and out of employment have spouses who are more likely to experience a layoff that the family might anticipate, and they are prepared to respond. The added worker effect is stronger for more educated women, for homeowners, and when spouses’ wages are higher. At the intensive margin, we do not see significant changes in hours worked among employed persons when their spouse loses a job.