Wednesday, June 12, 2013

Where did the gender unemployment gap go?

There was a time where females had little attachment to the labor force, and employers also considered them to be the easiest to dispense with in the case of a downturn. These lead to a gender unemployment gap, with females proportionally more unemployed. Times have changed. Females are now in many households the main breadwinners and thus more attached to the labor market than men, even during recessions. This has manifested itself in full force during the last one, which has been dubbed a "mancession" by some because the unemployment rate rose more for men than for women. That was new, and needs an explanation.

Stefania Albanesi and Ayşegül Şahin use a three-state labor search model to understand the data in various OECD countries. They confirm that the change in relative labor attachment explains the disappearance of the long-run gender unemployment gap. At business cycle frequencies, and in particular during recessions, the key is in the sectoral distribution of the female and male workforce. And as this distribution evolves, females benefit from more employment stability than men. Is this last recession a breakpoint for the labor market? There are so many things that are different from before, like super-low employment rates, hysteresis, and declining labor income shares. This all points to structural changes, and we should forget getting back to pre-recession labor markets.

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