01910cas a2200241 a 4500 AALejournalIMF002809 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451843873 1018-5941 BD-DhAAL BD-DhAAL Garcia-Escribano, Mercedes. Does Spousal Labor Smooth Fluctuations in Husbands' Earnings? : The Role of Liquidity Constraints / Mercedes Garcia-Escribano. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (42 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper theoretically and empirically investigates the role of spousal labor in buffering transitory shocks to husbands' earnings. To measure the amount of the shock that spousal labor absorbs, an instrumented cross-sectional variance decomposition is developed. Using data from the Panel Study of Income Dynamics, the paper finds that the smoothing resulting from the wives' labor response (both labor force participation and hours of work) is larger for households with limited access to credit. This finding, which is consistent with the model's prediction, indicates that because of the presence of liquidity constraints, the temporal change in family income (exclusive of wives' earnings) reinforces the substitution effect in explaining the effect of shocks to the husbands' earnings on spousal labor. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2004/020 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/020/001.2004.issue-020-en.xml IMF e-Library