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Household job search and labor supply of secondary earners


The unemployment rate and the inactivity rate -- the proportion of individuals outside the labor market -- of any location, are the aggregate result of the rates of various demographic and socioeconomic groups. Therefore, the analysis of the aggregated trend of these rates can hide specific labor market dynamics related to some groups or different members of a household. Also, since the labor market decisions of family members are taken jointly in an intrahousehold decision-making process, labor market opportunities of parents over a period can strengthen their sons/daughters' transitions to inactivity at that time and in future periods, resulting in an even lower unemployment rate. Thus, the hidden labor market transitions of different members of a family may explain some \textit{puzzles} in the relationship between economic activity and labor market outcomes, which challenge \textit{policy-makers} and researchers. This research proposal aims to investigate the labor market transitions of secondary earners within the household, sons/daughters aged 14 to 24 and their mothers. We estimate a household search model that allows distinction for inactivity and unemployment, \textit{on-the-job search}, and endogenous schooling decisions for sons/daughters. The model will be fitted to the Brazilian Employment data for the periods from 2003 to 2006 and 2010 to 2013. The estimation of the model will allow us to address three main questions: i) How much of the increase in inactivity of sons/daughters, observed in Brazil, in this period, is due to changes in the mothers' labor market status and how much is explained by exogenous factors that encourage or discourage young workers to search for jobs - which may be related to the decrease in the cost of acquiring education; ii) How does this dependence between the decisions of sons/daughters and mothers change in different subgroups of families ?; iii) What are the welfare impacts for sons/daughters of changes in the mothers' labor market parameters and changes in the father's income? The results will shed light on trends in unemployment and inactivity of specific members and can guide policy-makers through recommendations on how to promote welfare, taking into account the different impacts on some family members. Also, the results may reveal relevant effects of exogenous factors, such as programs that impacted the probability of concluding high school and policies for access to higher education. (AU)

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