Household unemployment and the labour supply of married women

A recent reform to the UK unemployment insurance (UI) system has reduced the duration of entitlement from 12 to six months. The UI and welfare systems interact in the UK ir: such a way that exhaustion of UI for married individuals has potentially large disincentive effects on the labour supply of spouses. A model of labour supply is estimated for married women allowing for endogenous unemployment durations of husbands and wives. We distinguish between transfer programme induced incentive effects, correlation between labour supply and wages within couples; complementarity between the leisure times of spouses and a discouraged worker effect.