Firm gender labour supply elasticities and sources of separation: evidence from Chile

Abstract

ABSTRACT We exploit a national administrative dataset to estimate labour supply elasticities at the firm level in Chile, distinguishing for the first time the source of separation (quits versus layoffs), which is crucial as only the former is consistent with employees’ responses to changes in wages. Our results suggest that labour supply elasticities increase by around 18% when all separations (i.e. without identifying its source) are used instead of voluntary separations (i.e. quits). Hence, it transpires that previous literature, which due to data constraints, did not identify the source of separations, presented results which were upward biased, thus overestimating labour market competitiveness. We also find that between firm differences in the gender-specific elasticities are more relevant than within firm differences when voluntary separations are used, a result that should be considered by governments in the design of their gender gap policy agenda.