The Pro-cyclical Unemployment Gender Gap: A Household Occupational Portfolio Choice?

Abstract

An empirical regularity in the US business cycles is that in recessions men's unemployment rate rises faster than women. This stylized-fact raises both empirical and theoretical questions. The notion of such distinctive pattern in the data is addressed with another regularity through an expenditure lens: can the relative volatility of consumption expenditures on non-durable goods, durable goods, and services inform about the corresponding occupational labor demand? And what if occupational demand meets a gender segregated occupational supply? By mapping a gender-colored occupational index into the three aggregate types of real personal consumption expenditures, we are able to show a correspondence between gender unemployment dynamics and consumption volatility. As for the cause, we develop a model that shows that gender differences in risk-aversion can lead to labor segregation based on occupational economic risk, which , in turn is realized in terms of the likelihood of unemployment spells. We look at the time series data of consumption expenditure as well as different gender- decomposition of labor market variables provided by the Bureau of Labor Statistics for the United States for the period 2000-2019.