The Macroeconomic Effects of Gender Discrimination in the Iranian Labor Market: DSGE Model

The purpose of this study is to explain the macroeconomic effects of gender discrimination against women in the Iranian labor market using the DSGE approach. By taking a set of characteristics into account, we extended the new Keynesian standard model that consists of three sections namely households, firms and a monetary authority, and  then parameterized it for the period of 2008-2019. The results show that in the steady state, gender discrimination causes women work more inefficiently in unpaid household work and less in the paid labor market than men. This inefficient working time allocation between women and men leads to a discrimination-induced gender wage gap, lower wage for women and men, lower consumption, output and welfare in comparison with non- discriminatory environment. The analysis of the impulse response function of model variables regarding the expansionary monetary policy shock shows that in the gender discriminatory environment, the increase in wages of women and men, consumption, output and inflation is less than the non-discriminatory environment. Moreover, due to the positive shock of technology, the increase of wages of women and men, consumption and output is less in comparison with the non-discriminatory environment.