The added-worker effect in the Netherlands before and during the Great Recession

Abstract

We study the added-worker effect in the Netherlands with large-scale administrative panel data for the period 1999-2015. Conditioning on samples with similar employment histories, we employ differences-in-differences to estimate the effect of a male partner's unemployment shock on the female partner's income. We find a modest added-worker effect of 2-5% of the male partner's income loss, as compared to the much larger compensating effect from social insurance schemes. The added-worker effect largely disappeared at the beginning of the Great Recession, but resurfaced a few years later. Over the years, profits from self-employment have become more important in dealing with unemployment shocks.

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