Spousal Insurance Around the World

(joint with Kevin Donovan, Philipp Grübener, Lukas Nord, and Todd Schoellman)

Abstract:

This paper studies intra-household insurance across countries with widely varying income levels. Empirically, we use new harmonized

microdata from quarterly rotating panel force surveys from 35 countries to show that the “Added Worker Effect” (i.e., labor force entry upon spousal job loss) is decreasing in GDP/capita, with some notable exceptions. Moreover, added workers primarily enter into self-employment. In turn, married self-employed women exit the labor force at higher rates in developing countries. To understand both the drivers and implications of the observed patterns, we develop a life-cycle model with two-member households, formal and informal labor markets, as well as endogenous human capital and asset accumulation. We use the model to quantify the relative importance of various channels that differ across countries and conduct counterfactual policy experiments.