Gender and the Great Recession: Changes in labour supply in Spain

Abstract

The focus of this paper is on the different effects of the Great Recession on the decision of women and men to participate or not in the labour market. The literature on the effects of economic crises on labour supply by gender is analyzed. In the applied part of the paper we test the two different hypotheses: the added-worker effect (AWE), showing a countercyclical behaviour of labour supply that implies an increase in individual labour supply in response to transitory shocks in his/her partner’s earnings, and the procyclical discouraged-worker effect (DWE). Given the deep effect of the Great Recession on the Spanish labour market, the empirical part of this paper will focus on the analysis of Spanish labour supply by gender. We have estimated labour supply models for individuals aged 25 to 54 living in couples with or without children by gender by using the EU-SILC 2007 and 2011 micro data for Spain. The results of our analysis show evidence of AWE, much more significant for women whose labour supply increases by 21% when their partner is unemployed against a 0.7% increase experienced by men married to unemployed women. A relevant AWE has also been detected for women if the partner works part-time and is therefore more likely to be underemployed. By comparing the labour supply behaviours before and after the crisis we can see that the discouraging effect connected to higher regional unemployment rates lost significance in 2011 leaving the AWE to dominate the labour supply decision during the crisis for couples.