Public spending, private gains: the gendered impact of exogenous fiscal policy shocks

Abstract

This paper examines the gender-specific effects of exogenous public spending shocks across a global sample, using a novel identification strategy and local projections. We distinguish between investment and consumption shocks and further decompose spending by function—education, health, and social protection. Public investment shocks generally reduce female labor force participation but increase wage shares and lower maternal mortality. Consumption shocks also lower participation but raise service-sector employment and tertiary enrolment in the short term. Functionally, education spending delays labor force entry but improves wages and enrolment; health spending boosts agricultural employment but may initially increase maternal mortality; and social protection stabilizes rural employment while reducing overall participation. Nonlinear analyses reveal strong heterogeneity by income level, initial gender inequality, and labor informality. For example, investment boosts female employment in poorer EMDEs but reinforces participation gaps in richer ones. These results highlight the need for gender-responsive fiscal frameworks tailored to structural conditions, and show that fiscal design—not just scale—shapes inclusive development outcomes.