Abstract
We model a mechanism which can generate most of the gender gap in unemployment observed in most of the OECD countries. The main components of the model are moral hazard, labor market institutions, and higher home productivity of women than men. The source of moral hazard is imperfect monitoring performed by the government. Higher home productivity of women makes them more likely to reject job offers and to stay unemployed which causes higher unemployment level for women. We find that each component has a quantitatively large effect on unemployment levels.
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