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Cyclical dynamics and the gender pay gap: A structural VAR approach

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  • Kovalenko, Tim
  • Töpfer, Marina

Abstract

Gender pay gaps persist worldwide despite political emphasis to close them. The literature found various drivers of the gaps but remained vastly silent about the role of cyclical dynamics. Using quarterly US data over the period 1979–2019, we study the effects of cyclical dynamics on the gender pay gap based on a structural vector auto-regression model with zero and sign restrictions. The results suggest that technology shocks lead to lower levels of the gender pay gap in the medium run, while higher wage bargaining power reduces the gap in the short run. However, these reductions of the gap come at the cost of increased unemployment. As a policy implication, these results imply a trade-off between lower gender pay gaps and higher unemployment.

Suggested Citation

  • Kovalenko, Tim & Töpfer, Marina, 2021. "Cyclical dynamics and the gender pay gap: A structural VAR approach," Economic Modelling, Elsevier, vol. 99(C).
  • Handle: RePEc:eee:ecmode:v:99:y:2021:i:c:s0264999321000717
    DOI: 10.1016/j.econmod.2021.03.007
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    More about this item

    Keywords

    Gender pay gap; Vector auto-regression (VAR) model; Cyclical dynamics; Macroeconomic shocks;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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