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Higher labour market bargaining power, higher unemployment in recessions

Author

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  • Vidya Atal
  • Orkideh Gharehgozli
  • Luis San Vicente Portes

Abstract

A well-known stylized fact about the US labour market is the behaviour of the female-to-male unemployment gap over the business cycle – in downturns, female unemployment rises at a slower pace than male unemployment, which reduces the gap between the genders; in upturns, the reverse is observed: men’s unemployment falls faster than women’s, thus rendering the gap pro-cyclical. In this paper, we model the labour market under a Diamond-Mortensen-Pissarides framework where the labour supply consists of women and men, who differ in their equilibrium (Nash) bargaining agreement over the match’s surplus. We show that, in the presence of such asymmetry, a negative aggregate productivity shock leads to a pro-cyclical female-to-male unemployment rate gap.

Suggested Citation

  • Vidya Atal & Orkideh Gharehgozli & Luis San Vicente Portes, 2023. "Higher labour market bargaining power, higher unemployment in recessions," Applied Economics Letters, Taylor & Francis Journals, vol. 30(15), pages 2086-2090, September.
    • Handle: RePEc:taf:apeclt:v:30:y:2023:i:15:p:2086-2090
    DOI: 10.1080/13504851.2022.2092591
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