Woman's Participation Decision and Partner's Labour Market Activity: Empirical Evidence from the United Kingdom

Presenter: Melisa Sayli, University of Manchester

This paper examines how married\cohabiting inactive women in the UK respond to their partner’s labour market activity, and how the time women spend in inactivity affects her participation behaviour. I estimate a discrete-time duration model of woman’s participation decision that explicitly models duration dependence in woman’s inactivity. I examine the added worker effect at the extensive margin by controlling for all potential labour market states of partners. Furthermore, I distinguish between two mutually exclusive destination states for women who are at risk of participation via unemployment and employment. The empirical evidence is based on a novel dataset on couples’ monthly labour market histories that I construct using the British Household Panel Survey 1991-2008. The results show that the longer a woman spends time away from the labour force, the less likely she is to enter in labour market. In line with earlier studies on the added worker effect in the UK, partner’s unemployment has a negative effect on woman’s participation. Women with unemployed men are around one-fifth less likely to enter the labour market than those whose partner is employed. On the other hand, the probability of women’s participation decreases by around 40% when the partner is long-term sick. In competing risks framework, duration dependence and partner’s labour market activities do not have significantly different destination-specific effects. Yet, on the contrary of previous literature, I argue that receiving unemployment or income support has a positive effect on women’s participation probability when the exit from inactivity is through unemployment.