Are Women More Exposed to Firm Shocks?

Yes. Labor income risk is the main source of financial risk for most individuals. Given potentially differing risk attitudes between men and women, we examine whether gender differences exist in labor income exposure to idiosyncratic firm shocks. Using a comprehensive employer-employee matched dataset, we find significant gender disparities: women’s wages are 25% more elastic and their dismissal rates are 34% more sensitive to firm performance shocks than those of their male colleagues--a gender gap in firm insurance. We show both theoretically and empirically that gender differences in job flexibility can help explain these findings.