Monetary Policy and Labor Market Gender Gaps

MonetaryPolicyandLaborMarketGenderGaps ValentinaFlamini,DiegoB.P.Gomes,BihongHuang,LisaKolovich,AinaPuig,andAleksandraZdzienicka WP/23/211 IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate. TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement. 2023 SEP ©2023InternationalMonetaryFundWP/23/211 IMFWorkingPaper Strategy,PolicyandReviewandMoneyandCapitalMarketsDepartments MonetaryPolicyandLaborMarketGenderGaps PreparedbyValentinaFlamini,*DiegoB.P.Gomes,*BihongHuang,*LisaKolovich,*AinaPuig†,andAleksandraZdzienicka* AuthorizedfordistributionbyStefaniaFabrizioandNaomiGriffinSeptember2023 IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement. ABSTRACT:Westudytheeffectsofmonetarypolicyshocksonemploymentgendergapsinapanelof22countriesusingquarterlydatafrom1990to2019.Ourresultsshowthatmen’semploymentfallsmorethanwomen’saftercontractionarymonetarypolicyshocks,narrowingtheemploymentgendergapovertime.Twofactorscontributetoexplainingthisheterogeneouseffect.First,alargerimpactofmonetarypolicyshocksonemploymentintheindustrysectorthatemploysmoremen.Second,thelargerresponseoftheemploymentgapinthesector(services)thatemploysthelargestshareofmenandwomen.Intermsoflabormarketadjustment,thenarrowingofthegenderemploymentgapisinitiallydrivenbyareductioninthegenderunemploymentgapsthat,overtime,resultsinanadjustmentinthegenderlaborforceparticipationgap—withmen’slaborforceparticipationdroppingmorethanwomen’s.Theeffectsarelargerincountrieswithmoreflexiblelabormarketregulations,highergenderwagegaps,andlowerinformalwomen’semploymentcomparedtomen’s.Finally,theeffectsarealsolargerforcontractionarymonetarypolicyshocksandduringexpansions. RECOMMENDEDCITATION:ValentinaFlamini,DiegoB.P.Gomes,BihongHuang,LisaKolovich,AinaPuig,andAleksandraZdzienicka.2023.“MonetaryPolicyandLaborMarketGenderGaps”.IMFWorkingPaperNo.23/211.InternationalMonetaryFund.WashingtonD.C. JELClassificationNumbers: E52,J16,J21,D63 Keywords: Monetarypolicy;shocks,genderinequality;labormarket;unemployment;laborforceparticipation Author’sE-MailAddress: VFlamini@imf.org,DGomes@imf.org,BHuang@imf.org,LKolovich@imf.org,ak3851a@american.edu,AZdzienicka@imf.org *InternationalMonetaryFund. †AmericanUniversity. WORKINGPAPERS MonetaryPolicyandLaborMarketGenderGaps PreparedbyValentinaFlamini,DiegoB.P.Gomes,BihongHuang,LisaKolovich,AinaPuig,andAleksandraZdzienicka1 1TheauthorsthankRatnaSahayandLuisBrandao-MarquesforsharingthecodesfromBrandao-Marquesandothers(2020),aswellasRishiGoyal,StefaniaFabrizio,SPRAIIGcolleagues,seminarparticipants,andreviewingdepartmentsfortheirinsightfulcomments.WealsothankDeiseMillerPassosDaSilvaforherexcellenteditorialsupport. Contents I.Introduction3 II.MethodologyandData5 III.OverallResults8 A.TotalEmployment8 B.SectoralEmployment9 C.UnemploymentandLaborForceParticipation10 D.RoleofLaborMarketCharacteristics11 IV.AsymmetricEffects13 A.ContractionaryversusExpansionaryMonetaryPolicyShocks13 B.RecessionsversusExpansions14 V.RobustnessChecks15 VI.Conclusion16 AnnexI.DataDetails17 AnnexII.SelectedEstimationDetails19 References20 FIGURES 1.ImpulseResponsesforMacroeconomicVariables7 2.ImpulseResponsesforWomenandMenEmployment,andGenderTotalEmploymentGap8 3.ImpulseResponsesforTotalEmploymentbySectors9 4.ImpulseResponsesgottheGenderEmploymentGapbySectors10 5.ImpulseResponsesfortheGenderGapinLaborForceParticipationandUnemploymentRate11 6.ImpulseResponsesfortheGenderGapinTotalEmploymentbyLaborMarketRegulation(EPL)12 7.ImpulseResponsesfortheGenderGapinTotalEmploymentDependingonGenderWageGap12 8.ImpulseResponsesfortheGenderEmploymentGapDependingonJobInformalityGap13 9.ImpulseResponsesfortheGenderEmploymentGapDependingontheTypeofMonetaryPolicyShock14 10.ImpulseResponsesfortheGenderEmploymentGapinExpansionsandRecessions15 11.ImpulseResponsesfortheGenderGapintheUnemploymentRatebyAlternativeShockMethod15 INTERNATIONALMONETARYFUND2 I.Introduction Thereisagrowinginterestamongacademicsandpolicymakersinanalyzingtheheterogeneouseffectsofmonetarypolicyonemploymentandotherlabormarketoutcomes.Itisdrivenbytheneedtonotonlybetterunderstandtheimpactofmonetarypolicyontotalemploymentandeconomicoutputbuttoalsoidentifythelabormarketchannelsunderlyingthedistributionaleffectsofthemonetarypolicy.2Itisthereforenotsurprisingthatanincreasingnumberofempiricalandtheoreticalstudieshavefocusedonhowmonetarypolicyaffectsdifferentsectorsofthelabormarket(e.g.,Singhandothers,2022,andreferencestherein),occupationalgroups,orlaborincome(e.g.,Zensandothers,2020;Heathcoteandothers,2020;Doladoandothers,2021;Ambergandothers,2022;Gomesandothers,2023). Lessattentionhasbeenpaidtohowmonetarypolicyaffectsgenderlabormarketoutcomes.Thesignoftheeffectisunclearapriori.Ontheonehand,menandwomenareno