Gender inequality in labor markets: a stochastic convergence study of unemployment gaps in the OECD

Purpose This study aims to empirically investigate the stochastic convergence of the gender unemployment gap (male minus female unemployment rates) across 30 OECD countries for the period January 2000 to December 2024. It examines the persistence of this gap, framed within the theoretical tension between unemployment hysteresis and the Law of One Rate of Unemployment (LOOUR). Design/methodology/approach The study employs the robust Bahmani-Oskooee, Chang, and Wu (BCW) panel unit root test, which innovatively accounts for both sharp structural breaks and smooth, nonlinear dynamics through Fourier functions, while being robust to cross-sectional dependence. Findings The findings reveal substantial evidence of stochastic convergence for a majority of the panel (25 out of 30 countries), meaning their individual gender unemployment gaps tend to revert towards the OECD average gender unemployment gap. This suggests that for these nations, shocks causing their gender unemployment gap to deviate from the OECD average are largely transitory. Originality/value This research offers a novel methodological perspective by directly examining the dynamic properties of the gender unemployment gap itself as a time series using advanced panel unit root tests. It contributes by empirically testing the LOOUR versus hysteresis debate specifically for gender-differentiated unemployment and provides evidence supporting tailored policy interventions to address both transitory and structural components of these disparities in developed labor markets.