Doctoral Student Seminar-The Impact of Married Women's Labor Market Participation on Poverty During the Great Recession

Tapas Paul

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Due to a decline in the income share of young and less educated households, poverty in the United States during the great recession rose dramatically and continued to grow until 2012. Spouses of unemployed husbands joined the labor force as income from spouses served as insurance in dual-earner families. Males and females suffered differentially in the face of the great recession. Males were impacted more than females in terms of job loss, and the recession was dubbed a “mancession.” Working wives’ contributions may have saved some families from falling into poverty or contributed to maintaining consumption smoothing. This study investigates to what extent a working wife helped her family escape poverty and how this function developed over the course of the great recession using the Survey of Income and Program Participation (SIPP) data. We use an extension of the standard Blinder-Oaxaca decomposition framework that decomposes the effect of a working wife on the proportion of families below poverty, allowing us to identify the importance of wives with unemployed husbands. We found that wife’s earnings reduce family poverty during the great recession. On average, wives’ earnings reduce the poverty rate by about 10 percent. Although we observe slightly different absolute poverty levels for the official and supplemental poverty measures, the observed patterns, especially the role of women’s labor force participation, were not influenced by which measure we used. This suggests that household poverty patterns are not very responsive to the differences in these measures, which stem from their treatment of government transfers and income tax liabilities. The decomposition also suggests that the wife acts proactively when her husband is unemployed.


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