Fiscal Shocks and the Time Use Within the Family

Abstract:

This paper studies the effects of military spending shocks on labor market outcomes and time use across demographic groups defined by gender and marital status. Using a shift-share (Bartik) instrumental variable approach based on state-level variation in military spending exposure, we estimate the causal effects of fiscal shocks on employment, work hours, and labor force participation for married females, married males, single females, and single males. We find that military spending increases labor market activity for men and single women, while married women reduce their labor supply—a pattern consistent with intrahousehold specialization in response to positive income shocks. We complement the main results with time use data from the American Time Use Survey (ATUS) to characterize how household members reallocate time between market work and home production. The paper also develops two complementary tests of instrument validity tailored to shift-share designs: a pre-period balance test examining whether baseline exposure shares predict pre-sample labor market trends, and a forward-looking test of parallel trends that examines whether future realizations of the instrument predict current outcomes within the main sample.

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Host or Publisher University of Nebraska Omaha Economics