The purpose of this paper is to check the existence of the added worker effect (AWE) in Italy during the Great Recession.
The authors used the Bank of Italy Survey on Household Income and Wealth to study factors driving the change in female work status over the period 2006-2012. The probit model was used to identify the timing, significance and the magnitude of the AWE. The authors also performed panel estimates to understand how women, positioned at either extensive or intensive margins, respond to the reduction in male hours of work which appear to be crucial for the AWE to manifest.
The authors find that with the crisis progressing, Italian women respond ever less to the reduction in male earnings, at the same time they become more responsive to the job loss by male partner which is the worst outcome. This means that the AWE survives, even if only in cases of serious hardship. It also remains when the reduction in male incomes is coupled with the reduction in their hours of work, suggesting that the redistribution of household chores is an important prerequisite for women to get into work.
This paper provides evidence on the AWE in Italy during the Great Recession. The authors took into account the peculiarity of the Italian labour market whose performance was affected by the use of the Wage Supplementation Fund. It masks part of the AWE when the standard methodology is used. By looking at the reduction in male earnings with or without a change in their work hours, the authors were able to reveal additional channels through which the AWE operates in Italy.
The authors wish to thank F. Bettio and M. Capparucci for their useful exchange of views which gave rise to this work. The authors are also grateful to the participants of the 33rd IWPLMS and the 5thESPAnet conferences held at the Sapienza University of Rome, to the participants of the workshop on disadvantaged workers held at the University of Chieti-Pescara as well as the two anonymous referees for their useful observations which led to the improvements on the previous version of this paper.
Ghignoni, E. and Verashchagina, A. (2016), "Added worker effect during the Great Recession: evidence from Italy", International Journal of Manpower, Vol. 37 No. 8, pp. 1264-1285. https://doi.org/10.1108/IJM-05-2015-0071Download as .RIS
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