Youth living in a couple. How women's labour supply adapts to the crisis. The case of Spain

The focus of this paper is on the effects of the Great Recession on young women's labour supply decision. Given the deep effect of the Great Recession on the Spanish labour market and in particular on youth labour supply, in the empirical part of this paper we focus on the Spanish labour market and estimate women's labour supply models by age groups, with a special focus on those aged 20 to 29 and 30 to 39 to detect how young women living in couples show different labour supply probabilities according to their partner's labour market status by using EU-SILC 2007 and 2012 micro data for Spain. We correct also for the non random selection of women living in couple in the younger age groups. This first step of analysis allows us to detect a negative effect, on the likelihood of forming a new household, of precarious employment conditions. The results of our analysis on women's labour supply by age group confirm the discouragement effect of young children for the youngest mothers' labour supply and also a positive effect of being an owner of a house with a mortgage. The literature shows that different effects can be at work with the crisis: the added-worker effect (AWE), showing a countercyclical behaviour of labour supply that implies an increase in individual labour supply in response to transitory shocks in his/her partner’s earnings, and the procyclical discouraged-worker effect.The results of our estimation support the existence of AWE in 2012 for young women living in couples. If in 2012 the discouragement effect dominates only for women older than 40, in 2007 it dominates also amongst younger women. Women's higher propensity to enter the labour market when their partner becomes unemployed or is persistently unemployed coupled with their likelihood to be inactive in the presence of young children would call for labour market policies targeted towards young women who are also more likely to withdraw from the labour market in presence of children. Childcare facilities could mitigate the latter effect and produce a more continuous workprofile thus avoiding the negative effect of work experience interruptions on labour supply over women's life cycle.