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Welfare for the Unemployed in Britain and Germany

Who Benefits?

Frances McGinnity

In recent decades, the problem of unemployment has generated fierce political and academic discussion on how national governments should address this issue. This book sheds light on a key debate in unemployment policy – that of whether unemployment benefits should be insurance-based or means-tested. It carefully compares the impact of the British and German benefit systems on poverty, the duration of unemployment and the spread of workless households during the 1990s.
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Chapter 6: The Labour Force Participation of the Wives of Unemployed Men

Frances McGinnity


* In Chapter 4 we found that the risk of poverty among the unemployed is highest in so-called ‘workless households’, where no other adult is working. Key to understanding the experience of unemployment is an appreciation of the role of another earner in protecting the unemployed from poverty. When one partner in a couple becomes unemployed, one might suppose that the other partner will find a job in order to supplement the household income. This is the so-called ‘added-worker’ effect predicted by the classical economic approach to labour supply. Theoretical models of family labour supply suggest that the unemployment of one spouse should increase the likelihood of employment of the other spouse (see, for instance, Ashenfelter 1980).1 Table 6.1 however, indicates the opposite of the ‘added-worker’ effect in Britain. In Britain, the employment rate of the wives of unemployed men is considerably lower than the employment rate of the wives of employed men. The data presented are for 1991 but replicate a well-established trend in Britain (see Dex et al. 1995 for a discussion). In West Germany, by contrast, Table 6.1 indicates little difference in the employment rates of the wives of employed and unemployed men. It is the task of this chapter to investigate this difference between Britain and West Germany using longitudinal data.2 Table 6.1 Employment rates of married** women aged 18–55 in Britain and West Germany, 1991 Husband Employed Country West Germany Britain Note: Source: Husband Unemployed (%) 64.6 33.9 All married Women, 18–55 (%)...

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