## wp1904

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---

### I. Introduction — Key findings and motivation
- Significant gender employment gap in the G-7:
  - Women’s labor market participation rate is about 17 percentage points lower than men’s.
  - The wage gap between women and men amounts to about 14 percent (IMF, 2017a).
  - If the female labor participation rate were raised to the country-specific male rate, output could increase by 5 percent in the United States (Aguirre et al., 2012).
- Rationale for fiscal policy focus:
  - G-7 countries use structural fiscal policies (taxation, childcare spending, gender-responsive public employment) to raise female labor force participation.
  - Example: Canada Child Benefit as a tax-free, income-tested benefit to alleviate child care costs (IMF, 2017a).
- Hysteresis concern:
  - Temporary cyclical changes in unemployment may become permanent (DeLong and Summers, 2012), implying fiscal policy could have persistent effects on gender employment if hysteresis is strong during slumps.
- Main empirical result (state-dependent local projections):
  - A positive spending shock of 1 percent of GDP during recessions would, on average, lift female employment by 1 percent, while increasing male employment by 0.6 percent.
  - Impacts during booms are largely statistically insignificant and generally smaller.
- Contribution:
  - Estimates state-dependent impact of fiscal policy shocks on the gender employment gap across all G-7 countries (Canada, France, Germany, Italy, Japan, the U.K., and the U.S.), extending prior work focused on single countries.

### II. Stylized facts — Observed patterns in the G-7
- Measure used: female share of total employment.
- Key patterns:
  - The female share of total employment has been on an increasing trend in the G-7, but the gender gap remains: for the G-7 as a whole, the number of female workers is about 18 percent lower than that of male workers.
  - After the global financial crisis, the increasing trend of the female share in total employment has been reversed in some countries (e.g., Canada and the U.S).
  - The female share of total employment tends to be countercyclical: in all G-7 countries except Japan, the female share tends to increase during recessions, narrowing the gender employment gap.
  - The female share of total employment is positively correlated with government spending in all G-7 countries except Japan; both tend to increase during recessions and decline during booms.

### III. Data and methodology — Empirical approach
- Data:
  - Quarterly data from the 1980s to 2017 for Canada, France, Germany, Italy, Japan, the U.K., and the U.S.
  - GDP, government spending, and tax revenue from OECD Economic Outlook and Eurostat.
  - Total employment and female share of total employment from ILO database and national statistics offices.
  - Nominal tax revenue converted to real values using a GDP deflator.
  - Series seasonally adjusted using the Census Bureau’s X12 filter and logged; except for the female share, series are in real terms.
  - Sample periods by country:
    - Canada: 1980:1-2016:3
    - France: 1992:1-2017:1
    - Germany: 1992:2-2016:4
    - Italy: 1999:1-2017:1
    - Japan: 1980:1-2016:3
    - The United Kingdom: 1971:1-2017:1
    - The United States: 1964:1-2016:4
- Identification and models:
  - Reduced-form VAR: Xt = B(L) Xt−1 + εt, with Xt = [gt, tt, yt, et, ft]′; εt ~ N(0, Σ). All variables log-transformed. Benchmark includes constant and deterministic time trend up to second order. Lag length set by information criteria.
  - Structural representation: A Xt = A B(L) Xt−1 + νt, with A εt = νt, νt ~ N(0, Ω), Ω diagonal.
  - Impulse responses: Xt = [1 − B(L)]−1 A−1 νt.
  - Identification of fiscal spending shock: Blanchard and Perotti (2002) approach with government spending ordered first; A−1 identified as Choleski decomposition of Σ.
  - Local projection (Jordà, 2005) used for state-dependent impacts:
    - State-dependent specification separates regressions when I indicates expansion (E) or recession (R) at shock time.
    - Dependent variable x is baseline female share of total employment f; controls z = [g, t, y, f]′.
    - Newey-West correction used for standard errors (per Ramey and Zubairy, 2017).
  - All non-deterministic coefficients vary by state; β_{.,h} yields response at horizon h to shock at t.

### IV. Empirical findings — Aggregate and state-dependent results
- SVAR (aggregate) comparisons:
  - Bredemeier et al. (2017) baseline: expansionary fiscal shock normalized so output changes by 1 percent on impact increases female employment by 0.5 percent and male employment by 0.07 percent, one year after the shock.
  - This paper: a positive government spending shock of 1 percent of GDP increases female employment by 0.17 percent, relative to male employment increase of 0.14 percent (SVAR aggregate result example).
  - Variance decomposition (U.S. example): fiscal spending and output shocks account for 6.1 percent and 36.2 percent of the change in the female share of total employment, respectively.
- State-dependent local projection results (impact of a 1 percent of GDP expansionary spending shock on the female share of total employment; changes in percentage points):
  - Table (Peak (Boom), 8th quarter (Boom), Peak (Recession), 8th quarter (Recession)):
    - Canada: 0.26* , 0.14* , 0.27* , -0.08
    - France: 0.21 , -0.01 , 0.36* , 0.03
    - Germany: 0.18* , -0.01 , 0.27* , 0.16*
    - Italy: 0.09* , 0.09* , 0.52* , 0.39*
    - Japan: 0.18 , 0.18 , 0.09* , 0.09*
    - U.K.: 0.05* , 0.01 , 0.11* , 0.08*
    - U.S.: 0.17 , 0.05 , 0.31* , 0.14*
    - Average: 0.16 , 0.06 , 0.28 , 0.12
    - Median: 0.18 , 0.05 , 0.27 , 0.09
  - Note: “*” indicates significance at 5 percent level.
- Key state-dependent findings:
  - During recessions, government spending shocks have positive impacts on gender equality in all seven G-7 cases; impacts at peak are statistically significant in all seven cases.
  - With a positive spending shock equal to 1 percent of GDP:
    - Average peak improvement in the female share of employment: 0.28 percentage points.
    - After 8 quarters, impact ranges from 0.08 percentage points (U.K.) to 0.39 percentage points (Italy).
  - Persistence:
    - Germany, Italy, Japan, the U.K., and the U.S.: impacts are long-lasting and increasingly positive through the projected 8-quarter period.
    - Canada and France: positive impacts are short-lived and fade out two years after the spending shock.
  - Comparison: SVAR vs. local projection differences may reflect state-dependence/nonlinearity (example: U.K. SVAR shows no significant impact; local projection shows robust impact during recessions).

### V. Impacts on unemployment, labor force, and employment by gender (recessions)
- Peak percent changes (effect of 1 percent of GDP spending shock during recessions). Note: "***" indicates significance at 5 percent level.
  - Canada:
    - Male — Unemployment rate -0.2***, Labor force 0.0, Employment +0.7
    - Female — Unemployment rate -0.4***, Labor force +0.3***, Employment +1.7***
  - France:
    - Male — Unemployment rate -1.0***, Labor force 0.1, Employment +1.5***
    - Female — Unemployment rate -0.8***, Labor force +0.3***, Employment +1.9***
  - Germany:
    - Male — Unemployment rate -0.5***, Labor force 0.0, Employment 0.0
    - Female — Unemployment rate -0.3, Labor force 0.0, Employment 0.0
  - Italy:
    - Male — Unemployment rate -0.1***, Labor force 0.0, Employment +0.0
    - Female — Unemployment rate -0.4***, Labor force +0.3***, Employment +0.5***
  - Japan:
    - Male — Unemployment rate -0.1***, Labor force +0.1***, Employment +0.7***
    - Female — Unemployment rate -0.1***, Labor force +0.1***, Employment +0.8***
  - U.K.:
    - Male — Unemployment rate 0.0, Labor force +0.1***, Employment 0.0
    - Female — Unemployment rate 0.0, Labor force +0.1, Employment +0.5***
  - U.S.:
    - Male — Unemployment rate -1.2***, Labor force +0.2***, Employment +1.6***
    - Female — Unemployment rate -1.1***, Labor force +0.3***, Employment +1.9***
  - Average:
    - Male — Unemployment rate -0.4, Labor force 0.1, Employment 0.6
    - Female — Unemployment rate -0.4, Labor force 0.2, Employment 1.0
- Interpretation:
  - With a fiscal spending shock of 1 percent of GDP during recessions, female employment increases by 1.0 percent at peak on average, while male employment increases by 0.6 percent on average (four countries’ male results not statistically significant).
  - Female labor force increases by 0.2 percent at peak on average; male labor force increases by 0.1 percent at peak on average (four countries’ male results not statistically significant).
  - Impacts on unemployment rates for male and female are broadly similar because female labor force increases more, creating base effects.

### VI. Impacts during booms
- General pattern:
  - During booms the impacts on the female share of total employment are generally smaller and less persistent.
  - Two G-7 countries (France and the U.S.) show impacts not statistically significant during booms.
  - For the G-7 as a whole, with a positive spending shock equal to 1 percent of GDP, the female share of employment improves on average by 0.16 percentage points at peak; impacts typically decline over two years.

### VII. Channels linking fiscal spending shocks to gender employment equality
- Household income effect:
  - Fiscal spending shocks may stimulate female labor supply more in response to household income loss during recessions (the added-worker/household income effect).
  - Analytical results are generally consistent with this theory: female labor increases more than male’s during recessions.
- Gender-oriented fiscal measures:
  - Spending linked to improved family benefits, subsidized child-care, and other social benefits can increase the net return to women’s work and directly influence gender equality.
- Occupational composition (pink-collar jobs):
  - Fiscal spending shocks may create larger labor demand in female-friendly occupations (services, clerical, retail sales), contributing to female-biased employment effects.
- Employment type (part-time):
  - Fiscal spending shocks may stimulate larger demand for part-time employment during recessions; part-time work plays an important role for female employment responses.
- U.S. empirical tests (industry/occupation/type decomposition):
  - Predictions using industries only show industry effects contribute but cannot fully account for female-biased responses—the actual female employment share falls more than industry dynamics predict.
  - Including occupations makes the predicted decline in relative female employment more pronounced, indicating occupational dynamics are important.
  - Adding employment types (full-time vs. part-time) further emphasizes the role of employment types in gender-specific dynamics; employment types play an important role for understanding fiscal spending shock effects.

### VIII. Fiscal instruments, asymmetry, and robustness
- Fiscal instruments:
  - Companion results indicate fiscal consumption shocks tend to have larger and more robust impacts than fiscal investment shocks.
- Symmetry:
  - A specification distinguishing positive and negative spending shocks shows impacts of positive and negative spending shocks are broadly symmetric across the G-7: positive shock increases female share, negative shock reduces it; some countries (e.g., U.K., Canada) show relatively large impacts from negative shocks.
- Robustness checks:
  - Results robust to controlling for sectoral composition and share of female-friendly sectors.
  - Robust to different sample periods (i) through 2008 and (ii) from 1990 to latest — broadly same results, with weaker significance.
  - Robust to alternative slack measure (deviation of moving average real GDP growth rate over 1.5 years from trend).
  - Robust to different control variable combinations (unemployment, employment, labor force participation, real wages, private consumption, interest rate).
  - Incorporating short-term interest rate to account for monetary policy reaction does not change results.

### IX. Policy implications
- Fiscal stimulus during recessions:
  - Fiscal stimulus during recessions can achieve twin objectives: supporting aggregate demand and improving gender employment gaps.
- Fiscal contraction risks:
  - Given the symmetric nature of fiscal spending shocks, a fiscal contraction during recessions is likely to worsen the gender employment gap; compensatory measures may be required to protect female employment.
- Assessment of gender-oriented policies:
  - Short-term outcomes of gender-equality policies depend on the state of the economy (recession vs. boom); evaluations should take state dependence into account.

### X. Suggestions for future research
- Disaggregate government spending to study differentiated impacts of components (nonwage consumption, wages, transfers, investment) on the gender employment gap.
- Examine tax shocks to compare their impacts with spending shocks.
- Study impacts of fiscal shocks on other gender gaps (e.g., gender wage gaps, managerial positions).
- Deepen theoretical understanding of transmission channels of fiscal shocks.
- Investigate how market institutions (e.g., labor market regulations such as ease of firing and hiring) shape fiscal shock outcomes on gender gaps.

*Source: IMF Working Paper wp1904 (selected sections and appendices).*

### REFERENCES .............................................................................................................

### REFERENCES (wp1904)

### I. Introduction — Key findings and motivation
- Significant gender employment gap in the G-7:
  - Women’s labor market participation rate is about 17 percentage points lower than men’s.
  - The wage gap between women and men amounts to about 14 percent (IMF, 2017a).
  - If the female labor participation rate were raised to the country-specific male rate, output could increase by 5 percent in the United States (Aguirre et al., 2012).
- Rationale for fiscal policy focus:
  - G-7 countries use structural fiscal policies (taxation, childcare spending, gender-responsive public employment) to raise female labor force participation.
  - Example: Canada Child Benefit as a tax-free, income-tested benefit to alleviate child care costs (IMF, 2017a).
- Hysteresis concern:
  - Temporary cyclical changes in unemployment may become permanent (DeLong and Summers, 2012), implying fiscal policy could have persistent effects on gender employment if hysteresis is strong during slumps.
- Mechanisms for fiscal spending shocks to affect gender employment:
  - Create larger labor demand in female-friendly (“pink-collar”) occupations.
  - Stimulate demand for part-time employment (which female workers generally occupy).
  - Household income effect: female labor supply may respond more to household income loss, especially during recessions.
  - Direct influence when spending shocks are associated with gender-oriented measures.
- Main empirical result:
  - Using the local projection method (Jordà, 2005), a positive spending shock of 1 percent of GDP during recessions would, on average, lift female employment by 1 percent, while increasing male employment by 0.6 percent.
  - Impacts during booms are largely statistically insignificant and generally smaller.
  - Results are robust to several checks (sample periods, control variables) and are driven by disproportionate employment changes in female-friendly industries, occupations, and part-time jobs.
- Contribution:
  - Estimates state-dependent impact of fiscal policy shocks on the gender employment gap across all G-7 countries (Canada, France, Germany, Italy, Japan, the U.K., and the U.S.), extending prior work focused on single countries.

### II. Literature review — Contextual evidence
- Taxation and female labor supply:
  - Keane (2011) and Bick and Fuchs-Schündeln (2017) find female labor supply is sensitive to taxation.
- Childcare and parental leave:
  - Jaumotte (2003) and Blau et al. (2013) show female labor force participation increases with childcare costs and parental leave policies.
- Part-time work and incentives:
  - Kinoshita and Guo (2015); Steinberg and Nakane (2012) indicate part-time opportunities affect women’s labor participation.
- State-dependent fiscal effects:
  - Fiscal impacts on GDP and employment differ between booms and recessions (Auerbach and Gorodnichenko, 2012, 2013; Baum et al., 2012; Ramey and Zubairy, 2017; Barro and Redlick, 2011).
  - Dell’Erba et al. (2014), Fazzari et al. (2015), and others document asymmetric employment/unemployment responses over the cycle.
- Gap in literature addressed:
  - Prior work (Bredemeier et al., 2017) used SVARs without controlling for state of the economy; current study examines state-dependent impacts on gender employment.

### III. Stylized facts — Observed patterns in the G-7
- Measure used: female share of total employment.
- Stylized fact 1:
  - The share of female in total employment has been on an increasing trend in the G-7 countries, but the gender gap remains.
  - For the G-7 countries as a whole, the number of female workers is about 18 percent lower than that of male workers.
- Stylized fact 2:
  - After the global financial crisis, the increasing trend of the female share in total employment has been reversed in some countries (e.g. Canada and the U.S).
  - Example evidence: U.S. recovery after the great recession favored men over women in all but 1 of the 16 major sectors reviewed (Kochlar, 2011).
- Stylized fact 3:
  - The female share of total employment tends to be countercyclical.
  - In all G-7 countries except Japan, the female share of total employment tends to increase during recessions, narrowing the gender employment gap.
  - Plausible explanation: higher cyclical exposure of male-friendly industries (manufacturing, construction) leading to larger male employment fluctuations (Hoynes et al., 2012).
- Stylized fact 4:
  - The female share of total employment is positively correlated with government spending in all G-7 countries except Japan.
  - Both female share of employment and government spending tend to increase during recessions and decline during booms.
  - Correlation does not imply causality; industry cycle exposure could drive the correlation. For the U.S., industry effects alone cannot account for the female employment share over the business cycle (Bredemeier et al., 2017).

### IV. Data and methodology — Empirical approach
- Models used:
  - Structural vector autoregressive (SVAR) model.
  - Local projection method of Jordà (2005) to allow state-dependent impacts of fiscal spending shocks.
- Data:
  - Quarterly data from the 1980s to 2017 for Canada, France, Germany, Italy, Japan, the U.K., and the U.S.
  - GDP, government spending, and tax revenue from OECD Economic Outlook and Eurostat.
  - Total employment and female share of total employment from ILO database and national statistics offices.
  - Nominal tax revenue converted to real values using a GDP deflator.
  - Data are seasonally adjusted using the Census Bureau’s X12 filter.
  - Sample period varies across countries and spans the longest timeframe for which data is available (see Appendix I in source).
- SVAR specification:
  - Five-variable SVAR: GDP (y), government spending (g), tax revenues (t), employment (e), and the female share of total employment (f).
  - The female share of total employment is used as the measure of gender employment equality (contrast with male share used by other studies).

### V. Empirical findings — Effects of fiscal shocks on gender employment
- State-dependent results (local projections):
  - During recessions, a positive government spending shock of 1 percent of GDP:
    - Lifts female employment by 1 percent on average.
    - Increases male employment by 0.6 percent on average.
  - During booms, impacts are largely statistically insignificant and generally smaller.
- Drivers of results:
  - Disproportionate employment changes in female-friendly industries, occupations, and part-time jobs in response to fiscal spending shocks.
- Robustness:
  - Results robust to variations in sample periods and control variables.
  - Policy implication: fiscal stimulus during recessions can support aggregate demand while improving gender employment gaps.

*Source: IMF Working Paper wp1904 (REFERENCES and selected sections from the chapter).*

### 15. We estimate the following reduced form VAR model:

### wp1904 - 15. We estimate the following reduced form VAR model:

### Methodology — VAR and SVAR identification
- Reduced-form VAR: Xt = B(L) Xt−1 + εt, where Xt = [gt, tt, yt, et, ft]′; B(L) is a polynomial in lag operators; εt ~ N(0, Σ). All variables are log-transformed. Benchmark specification includes a constant and deterministic time trend up to the second order. Lag length set by information criteria.
- Structural representation: A Xt = A B(L) Xt−1 + νt, with A εt = νt, νt ~ N(0, Ω), Ω diagonal, and A−1 Ω A−1′ = Σ. Identification requires additional restrictions beyond A−1 Ω A−1′ = Σ.
- Impulse responses computed as: Xt = [1 − B(L)]−1 A−1 νt.
- Identification of fiscal spending shock: Blanchard and Perotti (2002) approach. Government spending ordered first; A−1 identified as Choleski decomposition of Σ. First row of rotation matrix represents government spending shock. Narrative approach not used due to lack of comparable quarterly data.

### Methodology — Local projections and state dependence
- Local projection (Jordà, 2005) used to estimate state-dependent impact of government spending shocks on the gender employment gap; robust to omitted variables, misspecification, and allows nonlinearity.
- State-dependent local projection specification:
  x_{t+h} = I_{t−1}[α_{E,h} + Ψ_{E,h}(L) z_{t−1} + β_{E,h} shock_t] + (1 − I_{t−1})[α_{R,h} + Ψ_{R,h}(L) z_{t−1} + β_{R,h} shock_t] + Trends + ε_{t+h}
  - x: dependent variable (baseline: female share of total employment f)
  - z: controls (real GDP, real government spending, real tax revenue, female share of total employment; z = [g, t, y, f]′)
  - I: dummy indicating expansion (E) or recession (R) when shock hits (output gaps used as slack indicator)
  - Newey-West correction used for standard errors (per Ramey and Zubairy, 2017)
- All non-deterministic coefficients vary by state. β_{.,h} yields response of x at t+h to shock at t. Impulse responses constructed by estimating β for each horizon h.

### Empirical findings — SVAR results (aggregate)
- Expansionary government spending shocks generally increase the female share of total employment (except for the U.K. in SVAR).
- Example comparisons:
  - Bredemeier et al. (2017) baseline: expansionary fiscal shock (normalized such that output changes by 1 percent on impact) increases female employment by 0.5 percent and male employment by 0.07 percent, one year after the shock.
  - This paper: a positive government spending shock of 1 percent of GDP increases female employment by 0.17 percent, relative to male employment increase of 0.14 percent.
- Variance decomposition (example, U.S.): fiscal spending and output shocks account for 6.1 percent and 36.2 percent of the change in the female share of total employment, respectively.

### Empirical findings — State-dependent impacts (local projection and SVAR comparison)
- Table 1 (Effects of Government Spending Shock on Gender Employment; changes in the female share of total employment, in percentage points; impact of expansionary spending shock equivalent to 1 percent of GDP):
  - Columns represent: Peak (Boom), 8th quarter (Boom), Peak (Recession), 8th quarter (Recession)
  - Canada: 0.26* , 0.14* , 0.27* , -0.08
  - France: 0.21 , -0.01 , 0.36* , 0.03
  - Germany: 0.18* , -0.01 , 0.27* , 0.16*
  - Italy: 0.09* , 0.09* , 0.52* , 0.39*
  - Japan: 0.18 , 0.18 , 0.09* , 0.09*
  - U.K.: 0.05* , 0.01 , 0.11* , 0.08*
  - U.S.: 0.17 , 0.05 , 0.31* , 0.14*
  - Average: 0.16 , 0.06 , 0.28 , 0.12
  - Median: 0.18 , 0.05 , 0.27 , 0.09
  - Note: “*” indicates significance at 5 percent level.
- Key state-dependent findings:
  - During recessions, government spending shocks have positive impacts on gender equality in all seven G-7 cases; impacts at peak are statistically significant in all seven cases.
  - With a positive spending shock equal to 1 percent of GDP:
    - Average peak improvement in the female share of employment: 0.28 percentage points.
    - After 8 quarters, impact ranges from 0.08 percentage points (U.K.) to 0.39 percentage points (Italy).
  - Persistence:
    - Germany, Italy, Japan, the U.K., and the U.S.: impacts are long-lasting and increasingly positive through the projected 8-quarter period.
    - Canada and France: positive impacts are short-lived and fade out two years after the spending shock.
- Methodology comparison:
  - SVAR vs. local projection may differ due to state-dependence/nonlinearity (example: U.K. SVAR shows no significant impact; local projection shows robust impact during recessions).
  - Canada, Germany, Japan: robust impacts under both SVAR and local projections (during recession and/or boom).
  - France: SVAR shows robust results over eight quarters; local projection shows impacts not statistically significant during recession.

### Impacts on unemployment, labor force, and employment by gender (during recessions)
- Table 2 (Percent changes, peak after the shock). Note: *** indicates significance at 5 percent level.
  - Canada: Male — Unemployment rate -0.2***, Labor force 0.0, Employment +0.7 ; Female — Unemployment rate -0.4***, Labor force +0.3***, Employment +1.7***
  - France: Male — Unemployment rate -1.0***, Labor force 0.1, Employment +1.5*** ; Female — Unemployment rate -0.8***, Labor force +0.3***, Employment +1.9***
  - Germany: Male — Unemployment rate -0.5***, Labor force 0.0, Employment 0.0 ; Female — Unemployment rate -0.3, Labor force 0.0, Employment 0.0
  - Italy: Male — Unemployment rate -0.1***, Labor force 0.0, Employment +0.0 ; Female — Unemployment rate -0.4***, Labor force +0.3***, Employment +0.5***
  - Japan: Male — Unemployment rate -0.1***, Labor force +0.1***, Employment +0.7*** ; Female — Unemployment rate -0.1***, Labor force +0.1***, Employment +0.8***
  - U.K.: Male — Unemployment rate 0.0, Labor force +0.1***, Employment 0.0 ; Female — Unemployment rate 0.0, Labor force +0.1, Employment +0.5***
  - U.S.: Male — Unemployment rate -1.2***, Labor force +0.2***, Employment +1.6*** ; Female — Unemployment rate -1.1***, Labor force +0.3***, Employment +1.9***
  - Average: Male — Unemployment rate -0.4, Labor force 0.1, Employment 0.6 ; Female — Unemployment rate -0.4, Labor force 0.2, Employment 1.0
- Interpretation:
  - With a fiscal spending shock of 1 percent of GDP during recessions, female employment increases by 1.0 percent at peak on average, while male employment increases by 0.6 percent on average (four countries’ male results not statistically significant).
  - Female labor force increases by 0.2 percent at peak on average; male labor force increases by 0.1 percent at peak on average (four countries’ male results not statistically significant).
  - Impacts on unemployment rates for male and female are broadly similar, due to base effects (female labor force increases more).

### Impacts during booms
- During economic booms the impacts on the female share of total employment are generally smaller and less persistent.
  - Two G-7 countries (France and the U.S.) show impacts not statistically significant during booms.
  - For G-7 as a whole, with a positive spending shock equal to 1 percent of GDP, the female share of employment improves on average by 0.16 percentage points at peak; impacts typically decline over two years.

### Fiscal instruments and asymmetry
- Different fiscal instruments differ in impact:
  - Companion paper (Akitoby et al., forthcoming) decomposes spending into consumption and investment shocks: fiscal consumption shocks tend to have larger and more robust impacts than fiscal investment shocks.
- Symmetry test:
  - Specification with D_t indicating positive (P) or negative (N) shocks yields results (Appendix VI) showing impacts of positive and negative spending shocks are broadly symmetric across G-7: positive shock increases female share of total employment, negative shock reduces it. Some countries (e.g., U.K., Canada) show relatively large impacts from negative shocks.

### Robustness checks
- Results robust to:
  - Controlling for sectoral composition and share of female-friendly sectors (public services, health care, education) — results remain robust.
  - Different sample periods: (i) through 2008 and (ii) from 1990 to latest — broadly same results, with weaker significance.
  - Alternative slack measure: growth rate (deviation of moving average real GDP growth rate over 1.5 years from trend) — main results unchanged.
  - Different control variable combinations (unemployment, employment, labor force participation, real wages, private consumption, interest rate) — main results broadly unchanged.
  - Incorporating short-term interest rate to account for monetary policy reaction — results unchanged.

*Source: Authors’ calculations (excerpts from wp1904).*

### 32. Fiscal spending shocks could influence gender employment equality through several

### 32. Fiscal spending shocks could influence gender employment equality through several channels.

### Channels linking fiscal spending shocks to gender employment equality
- Household income effect:
  - Fiscal spending shocks may stimulate female labor supply more in response to the loss in household income during recessions (household income effect).
  - The long-standing theory of wages: if a married male worker involuntarily loses his job, the nonparticipating wife may enter the labor force to make up for the family income loss, implying a negative correlation between husbands’ income levels and wives’ labor participation.
  - Analytical results (Table 2, Annex IV) are generally consistent with this theory, with female labor increasing more than male’s during recessions.
- Gender-oriented fiscal measures:
  - Fiscal spending shocks, if associated with gender-oriented measures, could directly influence gender equality.
  - Examples of gender-related expenditure-side policies (Appendix II): improved family benefits, subsidized child-care, other social benefits that increase the net return to women’s work, and incentives for businesses to encourage the hiring of women.
  - Some policies could be undertaken in a budget-neutral manner; others have budgetary implications. Properly designed and executed fiscal spending shocks associated with those policies would contribute to gender equality.
- Occupational composition (pink-collar jobs):
  - Fiscal spending shocks may create larger labor demand for female-friendly occupations.
  - Bredemeier et al. (2017) show “pink-collar job” booms (services, clerical, retail sales) are drivers of the female-biased employment effects of fiscal policy; occupational dynamics explain female-biased employment effects.
- Employment type (part-time):
  - Fiscal spending shocks may stimulate larger demand for part-time employment during recessions.
  - Fiscal spending shocks may facilitate part-time work, which female workers generally occupy. Part-time workers are often hired to meet temporary labor demand and tend to increase when full-time workers are reduced (employment buffers).
  - The impact through this channel may vary by country.

### Empirical tests of channels (U.S. robustness analysis)
- Method:
  - Using the empirical approach in Bredemeier et al. (2017), the authors estimate impulse responses of the gender employment gap for the U.S.
  - They investigate effects of industry, occupation, and employment type (full time vis-a-vis part time).
  - Regressions estimated:
    - eg,t = βg · indt + εg,t
    - eg,t = γg i · indt + γg o · occt + ηg,t
    - eg,t = δg i · indt + δg o · occt + δg t · typet + νg,t
  - indt, occt, typet are vectors of industry-, occupational-, and type-specific employment levels. Predicted values used to calculate female employment share implied by industry/occupation/type.
- Results (Appendix VII summary):
  - Using prediction by industries (Appendix VII A):
    - Industry effects have some influence, but gender-specific effects of fiscal shocks cannot be fully understood by industry effects alone.
    - The actual female employment share falls more strongly than predicted by industry dynamics.
  - Using prediction by industries and occupations (Appendix VII B):
    - The predicted decline in relative female employment is more pronounced when occupations are taken into account, indicating occupations play an important role.
    - Results are consistent with Bredemeier et al. (2017).
  - Using prediction by industries, occupations, and employment types (Appendix VII C):
    - The predicted decline in relative male employment is further pronounced when employment types are included.
    - Employment types (full-time, part-time) play an important role for understanding gender-specific employment dynamics, particularly for fiscal spending shocks.

### Main empirical findings and patterns
- Expansionary fiscal spending shocks generally increase female employment, notably during recessions.
- In all G-7 countries, positive fiscal spending shocks contribute to gender equality during recessions, increasing female employment more than male employment.
- During booms, the impact on gender employment is less obvious and generally smaller than during recessions.
- During recessions, although female employment increases more than male’s, impacts on unemployment rates are broadly the same between male and female because of the base effect (female labor force increases more).
- Gender-specific employment dynamics can be largely explained by gender dynamics in industries, occupations, and employment types.
- The effects of positive and negative spending shocks on gender equality are broadly symmetric.

### Policy implications
- Fiscal stimulus during recessions:
  - Fiscal stimulus, particularly during recessions, can achieve the twin objectives of supporting aggregate demand and improving gender gaps.
- Fiscal contraction risks:
  - Given the symmetric nature of fiscal spending shocks, a fiscal contraction during recessions is bound to worsen the gender employment gap, calling for compensatory measures to protect female employment.
- Assessment of gender-oriented policies:
  - The short-term outcome of policies to improve gender equality depends on whether the economy is in a recession or under a boom.
  - Assessments of short-term impacts of gender-oriented measures should take into account the state of the economy.

### Suggestions for future research
- Disaggregate government spending to study differentiated impact of each component (e.g., nonwage consumption, wages, transfers, investment) on the gender employment gap.
- Consider tax shocks to find out how their impact differs from that of spending.
- Examine impacts of fiscal shocks on other gender gaps (e.g., gender wage gaps, managerial positions).
- Deepen theoretical understanding of transmission channels of fiscal shocks.
- Investigate how market institutions (e.g., labor market regulations such as ease of firing and hiring) determine outcomes of fiscal shocks on gender gaps in labor markets.

### Data and sample periods (Appendix I)
- Quarterly data collected: GDP, government spending, tax revenues, and the female share of total employment from Eurostat, ILO, OECD, and national statistics offices.
- Sample periods:
  - Canada: 1980:1-2016:3
  - France: 1992:1-2017:1
  - Germany: 1992:2-2016:4
  - Italy: 1999:1-2017:1
  - Japan: 1980:1-2016:3
  - The United Kingdom: 1971:1-2017:1
  - The United States: 1964:1-2016:4
- Series are seasonally adjusted and logged. Except for the female share of total employment, all series are in real terms. GDP deflator used to convert nominal to real values.

*Source: IMF working paper content (section 32 and related appendices).*

### Chapter 3 of World Economic Outlook: Recovery, Risk, and Rebalancing: 93-124. International

### Chapter 3 of World Economic Outlook: Recovery, Risk, and Rebalancing: 93-124. International

### Fiscal policy, employment, and multipliers
- International Monetary Fund, (2012), Fiscal Policy and Employment in Advanced and Emerging Economies, IMF Policy Paper. http://www.imf.org/external/np/pp/eng/2012/061512.pdf.
- International Monetary Fund, (2014), “Can Fiscal Policy Do More for Jobs?” Fiscal Monitor.
- Monacelli, T., Perotti, R., Trigari, A. (2010), “Unemployment Fiscal Multipliers,” Journal of Monetary Economics, 57(5): 531–553.
- Ramey, V. A. (2011). “Identifying Government Spending Shocks: It's all in the Timing” The Quarterly Journal of Economics 126(1): 1–50.
- Ramey, V. A. (2016). “Macroeconomic Shocks and Their Propagation” Handbook of Macroeconomics, Volume 2A, pp. 71 – 162. Elsevier.
- Ramey, V. A., Zubairy, V. (2017), “Government Spending Multipliers in Good Times and in Bad: Evidence from U.S. Historical Data,” Forthcoming in Journal of Political Economy.
- Romer C. D., Romer, D. H., (2010) “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks,” American Economic Review 100: 763-801.

### Gender, female labor force participation, and gender budgeting
- International Monetary Fund, (2017a), Gender Budgeting in G-7 Countries, IMF Policy Paper.
- Lagarde, C. (2017). “Every Woman Counts: Gender Budgeting in G7 Countries” https://blogs.imf.org/2017/05/13/every-woman-counts-gender-budgeting-in-g7-countries/.
- Organization for Economic Cooperation and Development, 2016. Gender Budgeting in OECD Countries (Paris: OECD).
- Jaumotte, F., (2003), “Female Labour Force Participation: Past Trends and Main Determinants in OECD Countries,” OECD Economics Department Working Papers No. 376.
- Kinoshita, Y., Guo, (2015), “What Can Boost Female Labor Force Participation in Asia?” IMF Working Paper, WP/15/56, Washington, D.C.: International Monetary Fund.
- Steinberg, C., Nakane, M., (2012), “Can Women Save Japan?” IMF Working Paper, WP/12/248, Washington, D.C.: International Monetary Fund.
- International Monetary Fund, (2017b), “Japan: Selected Issues”, IMF Country Report No. 17/243.

### Labor supply, added worker effect, and youth labor
- Lundberg, S. (1985), “The Added Worker Effect,” Journal of Labor Economics 3(1): 11–37.
- Juhn, C., Potter, S. (2007), “Is There Still an Added Worker Effect?”, Technical report, National Bureau of Economic Research.
- Maloney, T. (1991), “Unobserved Variables and the Elusive Added Worker Effect,” Economica 58 (230): 173–187.
- Tano, D. (1993), “The added worker effect. A causality test,” Economics Letters 43:111–117.
- Woytinsky, W. S. (1940), “Additional Workers on the Labor Market in Depressions: A Reply to Mr. Humphrey,” The Journal of Political Economy 48 (5):735–739.
- Monique Ebell, Niall O’Higgins (2015), “Fiscal policy and the youth labour market”, International Labour Office, Working Paper No. 200
- Keane, M. P., (2011), "Labor Supply and Taxes: A Survey,” Journal of Economic Literature 49(4): 961-1075.
- Juhn, C., Potter, S. (2007), “Is There Still an Added Worker Effect?”, Technical report, National Bureau of Economic Research.

### Empirical methods and macroeconomic identification
- Jordà, Ò., (2005), “Estimation and Inference of Impulse Responses by Local Projections,” American Economic Review 95(1): 161–182.
- Jordà, Ò., Taylor, A. M., (2016), “The Time for Austerity: Estimating the Average Treatment Effect of Fiscal Policy,” Economic Journal 126: 219-255.
- Ramey, V. A. (2011). “Identifying Government Spending Shocks: It's all in the Timing” The Quarterly Journal of Economics 126(1): 1–50.
- Ramey, V. A. (2016). “Macroeconomic Shocks and Their Propagation” Handbook of Macroeconomics, Volume 2A, pp. 71 – 162. Elsevier.

*Source: Chapter 3 bibliography, World Economic Outlook: Recovery, Risk, and Rebalancing: 93-124.*

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_Source: https://www.imf.org/-/media/files/publications/wp/2019/wp1904.pdf_