The discouragement effect was introduced by Long (1953). According to this effect, unemployed workers choose to leave the workforce during recessions, when expected wages and the likelihood of getting a job are lower. The added worker effect acts in the opposite direction. Reductions in household income during recessions could induce other members of the family to enter the labor market in order to maintain the level of consumption unchanged. The added worker effect has been estimated through the temporary entry of married women - whose husbands become unemployed - into the workforce. In this paper, we investigate empirically how the added worker and discouragement effects influence the labor participation rate in Brazil, using data from the PME. The added worker effect is represented by the difference in the probability of participation between wives whose husbands lost their jobs and wives whose husbands remained employed. The discouragement effect is estimated by the impact of changes in macroeconomic cycles, which are represented by deviations of the average labor earnings in each period from a given reference value, on participation. The results show that both effects play a role in determining the labor participation rate in Brazil.
