Divergent Perceptions, Divergent Pay: Inflation and the Gender Wage Gap

Lovisa Reiche and Nicolò Maffei-Faccioli

No 12835, CESifo Working Paper Series from CESifo

Abstract: Inflationary shocks do not affect all workers equally. Comparing men and women, we document two facts. First, both demand- and supply-driven inflationary shocks widen the gender wage gap within industries and occupations. Because these shocks imply opposite business-cycle conditions, their common effect points to inflation as the relevant force. Second, women and men perceive the same inflationary shocks as having different labor-market consequences: women expect conditions to worsen, while men expect them to improve. This asymmetry creates an expectations channel linking inflation to unequal wage growth. We formalize this channel in a New Keynesian search-and-matching model with male and female workers, imperfect information, and gender-specific ambiguity attitudes. Common macroeconomic signals lead ambiguity-averse women to place greater weight on adverse supply-driven states. For inflationary signals, this lowers their perceived outside options and wage demands relative to men's. Divergent perceptions translate common inflationary shocks into divergent pay.

Keywords: consumer expectations; gender wage gap; inflation; business cycle dynamics (search for similar items in EconPapers)
JEL-codes: C32 E24 E32 J16 J31 (search for similar items in EconPapers)
Date: 2026
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