Swinging female labor demand: How the public sector influences gender wage gaps in Europe

We incorporate an economy’s sectoral structure into a standard theoretical framework to explain the influence of relative demand and supply effects on the gender wage gap. Using micro data covering 30 European countries over the 2003-2013 period, we construct a unique macro panel of gender wage gaps. We demonstrate that the public sector has causally determined half of the decrease in the gender wage gap over the period, thus acting as a ’swing demander’ for female labor. We further prove that it is exclusively demand factors and not composition effects that are driving this result.