Economic inequality symbolized by a woman balancing on a tilting economic graph.

The Gendered Impact of Monetary Policy: Why Economic Solutions Aren't Always Gender Neutral

Avery Sinclair in Business & Economy August 2025 • 4 min read.

"Discover how monetary policies disproportionately affect women and what this means for economic equality. Understand the gendered nuances in economic strategies for a more inclusive financial future."

In an era striving for equality, it’s easy to assume that economic policies affect everyone uniformly. However, a growing body of research indicates that monetary policies—actions taken by central banks to manipulate the money supply and credit conditions—often have different consequences for men and women. Understanding these gendered impacts is crucial for creating a fairer economic landscape.

Monetary policy, at its core, involves managing interest rates and credit availability to influence economic activity. The goal is typically to control inflation, stimulate growth, or stabilize the economy. Yet, these broad measures can unintentionally exacerbate existing inequalities or create new ones. The mechanisms through which these policies affect individuals can vary widely based on gender, occupation, and sector.

This article delves into recent research that examines the gender-specific effects of monetary policies, particularly in developing economies. By exploring how these policies influence women’s employment, labor force participation, and economic well-being, we can begin to identify strategies for more inclusive and equitable economic solutions.

How Do Monetary Policies Differently Affect Women's Employment?

Economic inequality symbolized by a woman balancing on a tilting economic graph.

Recent studies highlight that monetary policy shocks—sudden, unexpected changes in monetary policy—can have distinct and often negative impacts on women's employment. For example, research using data from 99 developing economies between 2009 and 2021 found that women experience more negative employment responses following a monetary policy shock compared to men. This contributes to a widening of gender gaps in the labor market.

One key finding is that after a monetary policy shock, women are more likely to leave the labor market than men. This can create a misleading picture where unemployment rates for women appear stable or even improved, masking the underlying issue of reduced labor force participation. In other words, women aren't necessarily finding better jobs; they are simply exiting the workforce.

Sectoral Differences: Men are often employed in sectors like construction and manufacturing, which are more sensitive to interest rate changes. Women, on the other hand, tend to work in non-durable services such as education and healthcare, which are less responsive to monetary policy.
Job Types: Women are also more likely to hold part-time or temporary positions, making them more vulnerable to labor market adjustments following monetary policy changes.
Caregiving Responsibilities: Entrepreneurial women and primary caregivers may reduce their labor force participation during turbulent economic times, further skewing the impact of monetary policy.

These factors collectively suggest that monetary policies are far from gender-neutral. The structure of labor markets and the types of jobs predominantly held by women make them more susceptible to negative consequences from economic policies designed without a gendered lens.

Toward Gender-Aware Economic Policies

Addressing the gendered impacts of monetary policy requires a shift towards more inclusive and targeted economic strategies. Policymakers need to consider the differential effects on men and women, crafting measures that promote gender equality and resilience in the face of economic shocks. This includes:

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2402.05729,

Title: Monetary Policy And The Gendered Labor Market Dynamics: Evidence From Developing Economies

Subject: econ.gn q-fin.ec

Authors: Marjan Petreski, Stefan Tanevski, Alejandro D. Jacobo

Published: 08-02-2024

Everything You Need To Know

What are monetary policies, and why is it important to understand their impact on different genders?

Monetary policies are actions taken by central banks to manage the money supply and credit conditions, influencing economic activity. These policies, such as managing interest rates, aim to control inflation, stimulate growth, or stabilize the economy. It's crucial to understand their gendered impact because they don't affect everyone uniformly. Research indicates that men and women experience different consequences from these policies, particularly regarding employment and economic well-being. Understanding these differences is vital for creating fairer economic strategies.

How do monetary policy shocks influence women's employment compared to men, based on recent studies?

Recent studies indicate that monetary policy shocks can have distinct impacts on women's employment. Research using data from 99 developing economies between 2009 and 2021 found that women experience more negative employment responses following a monetary policy shock compared to men. This leads to a widening of gender gaps in the labor market. Specifically, after a monetary policy shock, women are more likely to leave the labor market, potentially masking underlying issues of reduced labor force participation. This means they may not be finding better jobs, but rather exiting the workforce entirely.

In what ways do sectoral differences and job types contribute to the varying impact of monetary policies on men and women?

Sectoral differences and job types play a significant role in how men and women are affected by monetary policies. Men often work in sectors like construction and manufacturing, which are more sensitive to interest rate changes, making them more susceptible to job losses during economic downturns. Women, on the other hand, tend to work in non-durable services like education and healthcare, which are less responsive to these policies. Furthermore, women are more likely to hold part-time or temporary positions, making them more vulnerable to labor market adjustments following monetary policy changes.

How do caregiving responsibilities affect the impact of monetary policy on women, and what are the implications?

Caregiving responsibilities significantly influence how women experience monetary policy impacts. Entrepreneurial women and primary caregivers may reduce their labor force participation during turbulent economic times. When economic shocks occur, the need to balance work with caregiving duties can force women to choose between employment and family obligations, leading them to exit the workforce or reduce their hours. This situation can distort the actual unemployment rates, making it appear that the labor market is stable when, in reality, many women are simply withdrawing from it to manage their caregiving responsibilities.

What are the key components of a gender-aware economic policy, and why is this approach essential?

A gender-aware economic policy requires a shift towards more inclusive and targeted economic strategies. Policymakers must consider the differential effects of monetary policies on men and women. The key components include understanding how women's employment, labor force participation, and economic well-being are specifically impacted. This means crafting measures that promote gender equality and resilience in the face of economic shocks. This approach is essential because it acknowledges that economic policies are not gender-neutral, and failure to address the gendered impacts can exacerbate existing inequalities. Implementing gender-aware policies ensures a fairer economic landscape and promotes more inclusive growth.