Abstract
The average Added Worker Effect (AWE) in the United States appears small. This paper shows that such muted estimates mask substantial heterogeneity across the life cycle and household structures. Using newly linked restricted administrative and census data from 2000–2022, I exploit mass-layoff events as exogenous shocks to identify involuntary job loss and its impact on spousal labor supply. Event study and matched difference-in-difference estimates reveal that younger spouses with children increase employment and earnings in response to displacement, consistent with a financially motivated AWE. In contrast, childless young female spouses often reduce labor supply, particularly when both partners work in the same industry, reflecting a “trailing spouse” dynamic. Among older couples, job displacement accelerates joint labor market exit, consistent with coordinated retirement. These findings highlight the role of age, parental status, and joint career dynamics in shaping household labor supply responses to job loss, and help reconcile why aggregate AWE estimates in high-income countries are small despite strong responses among population subgroups.