Monetary Policy and the Gendered Labor Market Dynamics: Evidence from Developing Economies

Abstract

Using a Taylor rule amended with official reserves movements, we derive country-specific monetary shocks and employ a local projections-estimator for tracking gender-disaggregated labor-market responses in 99 developing economies from 2009 to 2021. Results show that women experience more negative post-shock employment responses than men, contributing to a deepening of the gender gaps on the labor market. After the shock, women leave the labor market more so than men, which results in an apparently intact or even improved unemployment outcome for women. We find limited evidence of sector-specific reaction to interest rates. Additionally, we identify an intense worsening of women-s position on the labor market in high-growth environments as well under monetary policy tightening. Developing Asia and Latin America experience the most significant detrimental effects on women's employment, Africa exhibits a slower manifestation of the monetary shocks-impact and developing Europe shows the mildest effects.