A Structural Model of the Labor Market to Understand Gender Gaps among Marginalized Roma Communities

By Mauricio Salazar-Saenz and Monica Robayo

http://d.repec.org/n?u=RePEc:wbk:wbrwps:9398&r=dge

This paper constructs and estimates a household-level search model to analyze Roma spouses’ utility maximization for leisure, home production, and work. The paper aims to explain labor market gender gaps in a marginalized Roma population with low labor market participation rates (males 53 percent and females 17 percent). The analysis uses data from the 2017 Regional Roma Survey for six Western Balkan countries. The simulation results show that the main source for gender differentials in the labor market is the unequal opportunities in favor of males — not gender preferences or differences in home production productivity. Therefore, most of the gender differences in the labor market can be closed by providing wives the same labor market conditions as husbands. Counterfactual policy experiments show that policies that increase the frequency of receiving a job offer, decrease the frequency of laying off workers, and reduce search increase Roma husbands’ labor participation. Policies that equalize wages induces more wives to join the labor market and husbands to withdraw from it. This outcome signals that the wage gap is the dimension that deters the greatest number of Roma wives from joining the labor market.

There are two reasons I highlight this particular paper this week. The first is the rather unusual topic that actually fits very well for the modelling strategy. DSGE models are actually great tools in unusual setups where data or information may be lacking. Theory does wonders in such situations! The second reason is that I love how the paper is written. Each paragraph is introduced by one sentence in bold that summarizes it. Great for quick reading and getting additional details when you want them.