Female Labour Market Responses to Partner Employment Shocks: The Added Worker Effect in Italy

This article examines female labour market participation and labour supply responses to partner employment difficulties in Italy, focusing on the Added Worker Effect (AWE), defined as the compensatory increase in women’s labour market participation and/or labour supply following adverse household income shocks. Using longitudinal data from the Italian Labour Force Survey (2004–2019), spanning the Great Recession, the study applies a dynamic difference-in-differences framework to estimate women’s adjustments to partners’ employment transitions. The analysis extends the focus beyond partner unemployment to broader employment instability, including reduced working hours and job insecurity. Responses are analysed along the extensive margin (transitions from inactivity to employment or job search) and the intensive margin (changes in desired working hours or part-time to full-time), distinguishing between desired and actual labour supply to capture labour market and household constraints. Results reveal a statistically significant and counter-cyclical AWE in Italy. Female labour market participation increases following partner shocks but declines once partners return to stable employment, indicating a predominantly temporary effect. While women increase participation, actual working hours do not rise, though desired hours do. The magnitude of responses varies by household characteristics, region, and prior female labour market attachment. Overall, findings highlight the importance of household risk-sharing mechanisms and labour market rigidities in shaping women’s labour supply adjustments in a context of low female labour force participation. JEL codes :C22, D13, J22.