His unemployment, her response, and the moderating role of welfare policies in European countries. Results from a preregistered study

Abstract

Recent changes in labour markets have increased employment instability. Under these conditions, in male breadwinner families women might increase their labour supply when their male partners become unemployed. Previous studies have extensively investigated the role played by household and individual characteristics in explaining such increases in the labour supply of women. However, studies which examine the moderating role of specific welfare policies are missing. Our study contributes to the literature by investigating the moderating effect of childcare and tax-benefit policies for the labour supply response of women following the unemployment of their partner. We focus on a sample of 24 EU member states and the UK, during the period 2009-2019, combining longitudinal microdata from EU-SILC with country-period specific policy indicators generated with the use of the tax-benefit simulation model EUROMOD, UKMOD and country-period specific indicators of childcare use. We find that women indeed respond to men’s unemployment by increasing their labour supply though the response is fairly weak. We also find the response is not restricted by having children at home or availability of public childcare and does not depend on the generosity of unemployment benefits. It is, however, negatively affected by marginal tax rates.