Household Job Search and Labor Supply of Secondary Earners in the Family

We develop and estimate a structural household job search model with on-the-job search to investigate the trends in the labor market transitions of Brazilian sons and daughters and their mothers. We use data from the Brazilian... [ view full abstract ]

We develop and estimate a structural household job search model with on-the-job search to investigate the trends in the labor market transitions of Brazilian sons and daughters and their mothers. We use data from the Brazilian Monthly Employment Survey (PME/IBGE) for 2004 and 2014. Our main contributions are: i) we explicitly consider sons or daughters as decision-makers in a household job search model and ii) we distinguish and allow for the unemployment and inactivity of mothers and sons and daughters and different search behavior and job acceptance, depending on the situation of the other member in the labor market, non-labor income and labor income of fathers. We verify that the decreasing unemployment rate of sons/daughters is determined by labor market opportunities and conditions of this member, whereas the increasing trend in their inactivity is mostly determined by a decreasing encouragement rate and the increasing dropout rate, exogenous factors that could be related to the lower cost of education through public policies in the period. The decreasing job destruction and higher wages of mothers and the increasing income of fathers are the factors that mostly contribute to the higher average welfare of youth.