Why do Women Married to Unemployed Men Have Low Participation Rates?

Study of the disincentive effects of the unemployment benefit system on women's participation in Germany. An 'added-worker" effect would result in women married to unemployed men having higher labour force participation rates than women married to employed men. But in a variety of countries the opposite is the case. Participation in employment for wives of the unemployed is significantly lower than for wives of working men at the 1 percent level in seven of the 11 countries and at the 5 percent level in one other. In no country is participation by wives of the unemployed significantly higher. Of course, there are possible reasons that are consistent with the independent operation of an added worker effect. Characteristics associated with low participation may be more common among wives of the unemployed, such as low productivity and residence in areas of low labour demand. Conditions under which unemployment benefits are paid to the husband may also affect the wife's labour supply. A disincentive effect for married women may be expected if benefits paid to their husbands are means-tested on family income. Disincentives to family labour supply that may stem from the benefit system have been the focus of considerable attention in the UK where the most important unemployment benefit (in terms of numbers of recipients at any one time) is means-tested on family income.