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The gender pay gap at the top: the role of networks

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  • Sharmin Sazedj
  • José Tavares

Abstract

This paper assesses the relevance of professional networks for the gender pay gap amongst top managers. Using data on the universe of firms in Portugal, we show that female top managersearn 25% less than their male counterparts, and that 20% of this gap is due to differences in networks. Using Gelbach’s decomposition, we find that the network effect can be ascribed to firm sorting, i.e. well-connected managers tend to be associated to higher paying firms. By examining the gender composition and the type of connections of top manager networks,we find that same gender connections are important. We conclude that connections between females can play an important role in the existing corporate framework where males areoverrepresented, and thus policies furthering female representation in leadership positions can have positive spillover effects for other women.

Suggested Citation

  • Sharmin Sazedj & José Tavares, 2024. "The gender pay gap at the top: the role of networks," Working Papers w202423, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w202423
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    File URL: https://www.bportugal.pt/sites/default/files/documents/2024-12/WP202423.pdf
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    References listed on IDEAS

    as
    1. Elkinawy, Susan & Stater, Mark, 2011. "Gender differences in executive compensation: Variation with board gender composition and time," Journal of Economics and Business, Elsevier, vol. 63(1), pages 23-45.
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    6. Geiler, Philipp & Renneboog, Luc, 2015. "Are female top managers really paid less?," Journal of Corporate Finance, Elsevier, vol. 35(C), pages 345-369.
    7. Custódio, Cláudia & Ferreira, Miguel A. & Matos, Pedro, 2013. "Generalists versus specialists: Lifetime work experience and chief executive officer pay," Journal of Financial Economics, Elsevier, vol. 108(2), pages 471-492.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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