Labor shocks and gender gaps
A new edition of WIEM was celebrated in Warsaw, and we simply could not miss the opportunity to discuss our research with distinguished researchers from Poland and abroad alike. We thank the organizers for accepting our research for the conference, and all the participants for their useful insights and comments.
But what was the research about? We explore the role played by periods of unusually large labor reallocation on the emergence of gender wage gaps (GWG) in transition economies. For this, we employ two unique databases: the Life in Transition survey (2006) and a compilation of over 150 country-source-year individual level databases from different sources, ranging from the ISSP to national labor force surveys. We find evidence ofexistence of a connection between the size of flows and gender wage gaps. In particular, in years with large flows out of employment the GWG (adjusted for individual characteristics) tends to be up to 4 percentage points larger. To grasp the magnitude of the change, it represents around 20% of the average GWG. Moreover, we find that the effects are mostly driven by cohorts who were active in the labor market prior to 1989.
Two possible mechanisms are consistent with this findings. First, it is possible that skills of cohorts active prior to transition are not needed in the free market economy, and that in the process fo shedding labor, women were somehow more affected. Alternatively, it is possible that active women experienced a wage-stability trade off. In other words, they were willing to accept wage cuts to ensure continuing work. More so, in the presence of differences in hiring, these women might have also been more reluctant to switch employments. This explanation fits well with the idea of differences in risk aversion between men and women.