Fiscal Policy and Labor Market Outcomes in Europe

The macroeconomic effects of fiscal policy are central to both research and policymaking, yet relatively little is known about how fiscal shocks impact men and women differently across diverse labor market and institutional contexts. This paper provides the first comparative analysis of gender-specific responses to exogenous fiscal shocks in the Balkans relative to the rest of Europe. Using a cross-country panel dataset and the local projection method, we trace the dynamic effects of fiscal expansions and contractions on labor force participation, employment, and wage outcomes. The results reveal substantial regional variation and pronounced gender asymmetries. Expansionary fiscal shocks lead to modest and delayed improvements in female labor market outcomes in the Balkans, whereas effects in other European countries are stronger and more immediate. Conversely, contractionary shocks disproportionately reduce female employment, especially during downturns, with greater volatility observed in Balkan economies. These patterns reflect differences in sectoral employment composition, care infrastructure, and public service provision. Overall, the findings suggest that fiscal policy operates within structurally gendered labor markets, highlighting important implications for macroeconomic stabilization and labor market resilience in transitional economies.