This Time It’s Different: The Role of Women’s Employment in a Pandemic Recession; Michèle Tertilt (Mannheim University)

Abstract

In recent US recessions, employment losses have been much larger for men than for women. Yet, in the economic downturn caused by the Covid-19 pandemic the opposite is true: women’s employment declined much more than men’s. Why does a pandemic recession have a disproportionate impact on women’s employment, and what are the wider repercussions of this phenomenon? We argue that more women lost jobs because their employment is concentrated in contact-intensive sectors such as restaurants and because increased childcare needs during school and daycare closures prevented many from working. We analyze the macroeconomic implications of women’s employment losses using a model that features heterogeneity in gender, marital status, childcare needs, and human capital. A pandemic recession is qualitatively different from a regular recession because women’s labor supply behaves differently than men’s. Specifically, our quantitative analysis shows that a pandemic recession features a stronger transmission from employment to aggregate demand and results in a persistent widening of the gender wage gap. Many of the negative repercussions of a pandemic recession can be averted by prioritizing opening schools and daycare centers during the recovery.

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