Abstract:
We study the ways in which households make up for lost labour earnings following trade shocks, including alternative employment forms, delayed retirement and added worker effects using a large-scale panel dataset of linked censuses for households in England and Wales. We uncover a varied pattern of employment and household adjustments, with gender and age playing major roles in determining how workers respond. Men, especially when young, partly mitigate the adverse impacts of the shock by entering self-employment, while this is not true for women. Older men, but not women, tend to respond to shocks by delaying retirement. Exposure to import competition also reduces the likelihood that affected young women get divorced or find a new partner. The marital status of men in exposed industries is, by contrast, unaffected. As for intra-household insurance, men respond to trade shocks affecting their partner by reducing inactivity later in life, while the labour supply of women does not adjust in response to shocks affecting their partners. These findings show that average responses among workers disguise important heterogeneity, highlighting the importance the nature of shocks and the age and gender of affected workers when formulating policy.
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