New study: Being laid off affects women more severely than men

If you have ever tried losing your job, you know that it can have far-reaching consequences. In addition to losing a social network and something to get up for in the morning, being laid off may have long-term financial consequences. This has been documented in studies time and again since the 1990s. 

Yet, nobody has examined whether job loss affects men and women differently – until now. 

A new study, which has been published in the journal Labour Economics, shows that women experience a greater risk of unemployment and lower income in the first two years after losing their job compared to men. 

Postdoc Anne Sophie Lassen from CBS and Ria Ivandić from London School of Economics are the researchers behind the study. 

Women lose more income than men

By looking at Danish data from several mass layoffs in the production sector, they found that women experience a 45% higher risk of remaining unemployed after losing their job. Furthermore, their research showed that women also lose a significantly larger amount of their income than men when they are laid off.

“These differences exist primarily during the first two years, after which they vanish. However, it took the people who lost their job during the mass layoffs six years to return to their starting point, and that was true of both women and men,” Anne Sophie Lassen explains.

An important contributing factor to the difference between women and men is differences in experience and educational level. Typically, women in the production sector are educated at a lower level than men, which can have several negative consequences. 

“The lower level of education have consequences for women who lose their job. If you only have the equivalent of A-levels – as opposed to, for instance, being a skilled worker or a university graduate – which is all many of these women have, it is harder to find a new job,” Anne Sophie Larsen elaborates before pointing out that if women were at the same educational level as men, the difference would be reduced by one third. 

Greater inequality between mothers and fathers 

So, our study shows that there is a difference between women and men, but the difference between mothers and fathers is even greater

- Anne Sophie Lassen, Postdoc

However, differences in levels of education are not the only factor that plays a part in labour market gender inequality. Children are also a significant factor that affects women negatively. The risk of remaining unemployed after losing one’s job is more than twice as high for women with children living at home compared to men with children living at home. 

“So, our study shows that there is a difference between women and men, but the difference between mothers and fathers is even greater,” says Anne Sophie Lassen before offering an explanation that has been well-documented in previous research:

“If you are the family’s primary caregiver, it is obvious that finding a job that is compatible with family life can be more difficult. From previous research, we know that mothers require jobs with predictable working hours that match the opening hours of childcare institutions and with a minimum of commuting. If having children had the the same effect on men and women, the gendered aspect of long-term unemployment would be halved.”

The study takes its point of departure in the production sector, and the question is whether the gendered differences in unemployment and income that have been identified in the production sector would also be found in workplaces where knowledge workers make up a larger part of the employees. 

Anne Sophie Lassen offers a careful guess:

“If, for instance, a university, a consultancy or a bank implemented mass layoffs, differences in education would probably explain a reduction in gendered difference, as women are generally educated at a higher level than men. And yet, because we know that parenting also has a negative impact on highly educated women, including women with MBAs or researchers, by way of example, it is likely that we would see a gendered difference among knowledge workers that would, to a much higher degree, be related to children.”

Important to acknowledge differences for the initiatives to work 

If you exclude women from analyses, you will get a result that is less that what it actually is, and if politicians implement initiatives based on incorrect data, they are unable to make the best decisions

- Anne Sophie Lassen, Postdoc

The research at CBS is thus leading to new knowledge in the debate on gender equality in Denmark. It has now, for the first time, been documented that job loss affects women and men in significantly different ways. Surprisingly, this was not the original purpose of the research project. 

In fact, the two researchers were working on a completely different project, studying how family dynamics change in terms of job loss in relation to, for example, divorce or conflict. During this process, they discovered a substantial gap in the available research. 

Women were completely excluded from existing analyses of the consequences of job loss, even in more recent studies from Scandinavia, where women’s participation in the labour market is not significantly lower than men’s. It is often the case in economic calculation models that, historically, have considered women’s working life – with, for instance, more parental leave and part-time work – too complicated to be included. 

The consequences of this is that the overall picture is skewed, Anne Sophie Lassen explains:

“If you exclude women from analyses, you will get a result that is less that what it actually is, and if politicians implement initiatives based on incorrect data, they are unable to make the best decisions,” says Anne Sophie Lassen, who then goes on to explain that from a political perspective, we should pay close attention to the most marginalised groups:

“While the gender difference is greater among parents, we can see that the people who are absolutely worst off are women over 50 and women whose education does not extend beyond A-levels. These groups are in need of upgraded skills or more support than others if they are to join the labour market again.”

Contact:

Postdoc Anne Sophie Lassen, assl.eco@cbs.dk

Journalist Martine Mengers, mm.slk@cbs.dk