Why Is There Not More Spousal Insurance?

Conversations on Transformation, a STEG podcast

A wage job in a poor country is a precarious thing. In the poorest economies in Todd Schoellman's sample, more than 20% of wage workers lose their job within three months, against under 5% in rich countries. There is no unemployment cheque, often no savings to fall back on, and in a one-earner household the obvious response is for somebody else to go out and find work. Does that actually happen?

Schoellman tells Tim Phillips how he and his co-authors are attempting to answer that question using harmonised labour force survey data that links households from Bolivia to Botswana. Does a wife goes to work when her husband loses his job? The answer is no, in rich countries and poor ones alike. Schoellman presented the paper at STEG's sixth Annual Conference in Nairobi in January 2026, and he talks Tim through a result that surprised him more than almost anything else he has found in 15 years of research.

The research behind this episode

Bacher, Annika, Kevin Donovan, Philipp Grubener, Lukas Nord, and Todd Schoellman. 2026. "Household Labor Supply Insurance Around the World." Work in progress, presented at the STEG Annual Conference, Nairobi, January 2026, under the working title "Spousal Insurance Around the World."

To cite this episode

Phillips, Tim, and Todd Schoellman. 2026. "Why Is There Not More Spousal Insurance?" Conversations on Transformation (podcast).

About the guest

Todd Schoellman is a senior research economist at the Federal Reserve Bank of Minneapolis. He was previously an assistant professor at Arizona State University and Clemson University, and holds a PhD from Stanford University. His research spans labour market dynamics in developing countries, human capital accounting, and the drivers of cross-country income differences.

Research cited in this episode

The Current Population Survey is the source of the US labour market data Schoellman contrasts with the developing world. Running continuously since 1947, it is one of the oldest household surveys that lets researchers track the same worker's employment status from one period to the next, which is exactly what a study of job loss and household response requires.

The European Union Labour Force Survey extended this kind of tracking to most of Europe from the 1970s and 1980s onwards. Along with the Current Population Survey, it explains why decades of research into the added worker effect have focused almost entirely on rich countries. Poorer countries simply did not have comparable panel data until recently.

The added worker effect is the name economists give to exactly the behaviour Schoellman tests for, a non-working spouse entering the labour force after the main earner loses a job. The term originates with Shelly Lundberg's 1985 paper of the same name in the Journal of Labor Economics, which established the low take-up rates in the United States that this new research now finds hold just as strongly, or just as weakly, across the developing world.

Labor Market Dynamics and Development, published by Kevin Donovan, Will Jianyu Lu, and Todd Schoellman in the Quarterly Journal of Economics in 2023, is the earlier project that built the underlying data infrastructure. Schoellman and Donovan spent roughly a decade collecting and harmonising panel labour force surveys from countries that had only recently started building the kind of household tracking data that rich countries take for granted, and that dataset is the foundation for the household insurance question tackled in this episode.

More Conversations on Transformation episodes

How much is a formal job worth in Mexico? Brenda Samaniego de la Parra talks to Tim about Mexico's informal economy, the other side of the coping mechanism Schoellman describes, where displaced workers move into self-employment rather than sit idle.

How land reforms in China helped women. Ting Chen discusses how the Hukou system and its reform shaped migration and life chances for Chinese women, a different angle on the question of what actually determines whether women enter paid work.

Further reading

Bringing Work Home: Flexible Arrangements as Gateway Jobs for Women in West Bengal, a STEG working paper by Lisa Ho, Suhani Jalota, and Anahita Karandikar, finds that hundreds of millions of women who want paid work stay out of the labour force because the jobs on offer do not fit around their household roles, a possible clue to why Schoellman's wives do not step in even when the household needs the income.

Self Employment, Micro-Entrepreneurship, and Development, a STEG synthesis paper by Austin Davis, Eric Hsu, and Mitchell VanVuren, reviews why firms in poorer countries are disproportionately small and self-employment so common, directly relevant to the finding that displaced husbands mostly re-enter work as the self-employed.