Risk Pooling in The Family: Within Couple Inter-Temporal Responsiveness in Labor Market Activities

• In Event: 525 - Section on the Sociology of the Family Paper Session. Work and Family Intersections

Abstract

Family is a social institution that serves many social functions. Recently, a growing body of research calls attention to the role of family as a form of microlevel risk pooling, in that members of a family can pool their economic resources and adjust their behaviors to alleviate the impact of economic insecurity that they face on the labor market. The current paper studies the within-couple inter-temporal responsiveness in labor market participation as an empirical case of within-family risk pooling. Applying fixed-effect models to NLSY79 data, I found that that among married couples, the wife tends to adjust her labor supply according to the labor market outcomes of her husband, such that if the husband earns less annual income, works fewer hours, or receives a lower hourly wage, the wife will increase the amount of annual work hours or stay in employment statuses with greater level of labor market participation. In addition, the wife’s responsiveness in labor market activities is greater when there is a young child present in the household, when the family income level is in the middle range, and when wife is contributing close to half of total family income.

Author

• Siwei Cheng, New York University