The Role of Local Public Goods for Gender Gaps in the Spatial Economy

We assess the role of local public goods provision for gender gaps in the labour market. We find that higher fiscal revenues of local governments are associated with decreasing gender employment gaps in German labour market areas because it decreases labour supply for male workers at a higher rate than for female workers. The results are robust when we include instrumental variables that address the endogeneity of local public goods provision. To assess the impact of fiscal transfers across regions on gender gaps we quantify a spatial general equilibrium model with multiple types of workers, who are differently affected by local public goods provision in their labour supply decision. We find that transfers reduce disparities across regions. This goes along with smaller gender gaps in employment in treated regions because female workers are disproportionately pulled into market work and regions with low productivity.