The Effect of Wage Differences on the Cyclical Behavior of the Two Genders in the Labor Market

1. The Effect of Wage Differences on the Cyclical Behavior of the Two Genders in the Labor Market Nissim Ben-David

2. Abstract During prosperous periods, which are characterized by an increase in productivity and in wages, the rates of separation from occupied jobs decrease while the probabilities of finding a new job increase. Thus, unemployment rates fall. Empirical observations however, indicate that the magnitude of this decline is not the same for both genders. This paper investigates the effect of the business cycle on the probabilities of transition between employment and unemployment for men and women. It provides a possible explanation of how different changes in variables, such as wages or productivity of each gender, would effect the separation rates and the probabilities of finding a job for each gender, and thus, determine differences in the magnitude and the direction of the change in the rate of unemployment. Ben-David Nissim, Department of Economics, University of Haifa and Emek Yezreel Academic College, 31905 Haifa Israel. Email: NissimB@yvc.ac.ilPhone 972-4-6398847, Fax 972-4-6291452

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