Women's Labor Market Reactions to Family Disruptions

Measuring the labor-force response of a woman to changes in her husband's earnings is the goal of this dynamic model. Allowing for uncertainty, the model modifies the constant shadow price of initial assests framework so that the shadow price varies over time. It is shown that the change in a woman's labor supply is related to the deviation of the husband's actual work hours from the expected amount. The estimation indicates that the largest response to the loss of husband's income occurs with a divorce or separation; smaller effects are noted for widowhood, and husband's unexpected unemployment or health change. Copyright 1989 by MIT Press.