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Of Age, Sex, and Money: Insights from Corporate Officer Compensation on the Wage Inequality Between Genders

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  • David Newton

    (John Molson School of Business, Concordia University, Montréal, Québec H3H 0A1, Canada)

  • Mikhail Simutin

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

Abstract

This paper shows that the gender and age of the wage setter are crucial determinants of the disparity in wages between sexes. We document our findings using a data set on compensation of corporate officers that is uniquely suited for this analysis because officer wages are set by chief executive officers (CEOs). We show that CEOs pay officers of the opposite gender less than officers of their own gender, even when controlling for job characteristics. Older and male CEOs exhibit the greatest propensity to differentiate on the basis of sex. Female officers receive smaller raises if the firm is headed by a man. Our results suggest that CEO gender and age are economically more important determinants of officer compensation than are firm stock performance, stock volatility, or return on assets. This paper was accepted by Uri Gneezy, behavioral economics.

Suggested Citation

  • David Newton & Mikhail Simutin, 2015. "Of Age, Sex, and Money: Insights from Corporate Officer Compensation on the Wage Inequality Between Genders," Management Science, INFORMS, vol. 61(10), pages 2355-2375, October.
    • Handle: RePEc:inm:ormnsc:v:61:y:2015:i:10:p:2355-2375
    DOI: 10.1287/mnsc.2014.1998
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