Unemployment and consumption patterns NIEVES LA  ZARO*, Ma LUISA MOLTO  and ROSARIO SA  NCHEZ Universidad de V alencia, Dpto de Ana Âlisis EconoÂmico, Avd. De los Naranjos s/n, Edi®cio Departamental Oriental, V alencia 46022 In this paper we obtain empirical evidence about the eect of female and male unemployment on household demand of a selection of goods and services. We analyse the percentage of the family income expenditure on a particular group of goods concerning education, domestic services, leisure goods, hotels etc. The impact of several determinants on each group of commodities is estimated using a Tobit speci®cation. The data used for estimation have been taken from T he Household Expenditure Survey ( 1990±91). Our main result is that male and female unemploy- ment has a dierent impact on the household consumption. I. INTRODUCTION According to the European Commission ( 1994) unemploy- ment is a major problem in most European economies but it is particularly acute in Spain. Spain has had the highest unemployment rate among the Community countries unin- terruptedly since 1979. The incidence of unemployment is very uneven across population groups, as it usually occurs in countries with high unemployment. In spite of some improvement since the second half of the 1980s, unemploy- ment still mainly concerns women and young people. In spite of some progress between 1987 and 1992, the inci- dence of long-term unemployment ( more than one year) is still sharper in Spain than in other countries. In line with what has occurred in other countries, both in terms of employment and participation rates, male workers have been losing ground in contrast with a higher partici- pation of women, though in the case of Spain it is still low. The activity rate of women rose from 32.4% in 1975 to 42.7% in 1993, whereas that for men fell from 92.4% to 76% in the same period. The share of female employment rose from 26.6% to 33.3% in the same period. While this is partly a result of the growing tertiarization of jobs, the social changes, which took place in the 1970s, played a signi®cant role. The lowering in birth rates, the growing level of education of women, the introduction of temporary contracts in the mid-1980s and the deindustrialization pro- cess which hit elderly less-quali®ed men more severely, are the main factors. Moreover, besides these longer-term fac- tors, the participation rate has also a signi®cant pro- cyclical component. However, the most important point is the still low rate of participation of women which features into a large pull of potential women ready to enter the labour force. According to CES ( 1994), the Spanish population has changed their consumption habits over the last 20 years. In particular the participation rate of women has increased 10 points in 8 years, and this fact modi®ed the demand of goods and services of households where women participate in the labour market. 1 When a woman decides to partici- pate there appears two eects. First, her decision increases household income. Second, it modi®es her temporal restric- tion and, in this way, the composition of goods demanded by the family, as a whole. This paper constitutes a ®rst attempt to explore the impact of unemployment of some household members on household consumption of typical `time intensive’ goods and services like entertainment, and some `time saving’ services like domestic services. Finally, the family expendi- ture on education is considered here, given the increasing relevance of this type of consumption over the last two decades in Spain. The structure of the paper is as follows: the theoretical framework and the empirical model are examined in Applied Economics ISSN 0003±6846 print/ISSN 1466±4283 online # 2000 Taylor & Francis Ltd Applied Economics, 2000, 32, 367± 379 367 * To whom correspondence should be addressed. 1 In La Âzaro (1996) appears a more complete study about the eects of female participation on household consumption. Also, see La Âzaro and Molto  ( 1997).