Abstract/Summary

We examine whether couples in the UK increase labour supply to cushion the fall in earnings from a job loss and whether behaviours differ between periods of growth and of recession. We consider both male and female earners in single and dual earner couples and look at various dimensions of labour supply adjustment. We find evidence of labour supply reactions, but they can be negative as well as positive, particularly at the extensive margin. During the recession, household reactions are either unchanged or couples increase their attachment to the labour market, with bigger positive reactions and smaller negative ones. People do not seem to react in advance of job losses, suggesting that unemployment typically comes as a surprise.