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Understanding the Gender Pay Gap: What's Competition Got to Do with It?

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  • Alan Manning
  • Farzad Saidi

Abstract

A number of researchers have argued that men and women have different attitudes toward and behavioral responses to competition; that is, women are more likely to opt out of jobs in which performance pay is the norm. Laboratory experiments suggest that these gender differences are rather large. To check these hypotheses and findings against differences in the field, the authors use performance pay as an indicator of competition in the workplace and compare the gender gap not only in incidence of performance pay but also in earnings and work effort under these contracts. They find that although women are less likely than men to work under performance pay contracts, the gender gap is small. Furthermore, the effect of performance pay on earnings is modest and does not differ markedly by gender. Consequently, the authors argue, the ability of these competition hypotheses to explain the gender pay gap seems very limited.

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 63 (2010)
Issue (Month): 4 (July)
Pages: 681-698

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Handle: RePEc:ilr:articl:v:63:y:2010:i:4:p:681-698

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References

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  1. Uri Gneezy & Kenneth Leonard & John List, 2009. "Gender differences in competition: Evidence from a matrilineal and a patriarchal society," Artefactual Field Experiments 00049, The Field Experiments Website.
  2. Thomas Lemieux & W. Bentley Macleod & Daniel Parent, 2006. "Performance Pay And Wage Inequality," Departmental Working Papers 2006-08, McGill University, Department of Economics.
  3. Datta Gupta, Nabanita & Poulsen, Anders & Villeval, Marie Claire, 2005. "Male and Female Competitive Behavior: Experimental Evidence," IZA Discussion Papers 1833, Institute for the Study of Labor (IZA).
  4. Dohmen Thomas & Falk Armin, 2010. "Performance Pay and Multi-dimensional Sorting - Productivity, Preferences and Gender," ROA Research Memorandum 003, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  5. Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach," Cahiers de recherche 9406, Universite de Montreal, Departement de sciences economiques.
  6. Joseph G. Altonji & Rebecca M. Blank, . "Race and Gender in the Labor Market," IPR working papers 98-18, Institute for Policy Resarch at Northwestern University.
  7. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563 Elsevier.
  8. Edward P. Lazear, 1996. "Performance Pay and Productivity," NBER Working Papers 5672, National Bureau of Economic Research, Inc.
  9. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2003. "A sticky floors model of promotion, pay, and gender," European Economic Review, Elsevier, vol. 47(2), pages 295-322, April.
  10. George J. Borjas, 1981. "Job mobility and earnings over the life cycle," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(3), pages 365-376, April.
  11. Paserman, Marco Daniele, 2007. "Gender Differences in Performance in Competitive Environments: Evidence from Professional Tennis Players," CEPR Discussion Papers 6335, C.E.P.R. Discussion Papers.
  12. Nabanita Datta Gupta & Anders Poulsen & Marie-Claire Villeval, 2005. "Male and Female Competitive Behavior: Experimental," Post-Print halshs-00175039, HAL.
  13. John S. Heywood & Patrick L. O’Halloran, 2005. "Racial Earnings Differentials and Performance Pay," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
  14. Paarsch, Harry J. & Shearer, Bruce S., 2007. "Do women react differently to incentives? Evidence from experimental data and payroll records," European Economic Review, Elsevier, vol. 51(7), pages 1682-1707, October.
  15. Alan Manning & Joanna Swaffield, 2005. "The Gender Gap in Early Career Wage Growth," CEP Discussion Papers dp0700, Centre for Economic Performance, LSE.
  16. Victor Lavy, 2008. "Gender Differences in Market Competitiveness in a Real Workplace: Evidence from Performance-based Pay Tournaments among Teachers," NBER Working Papers 14338, National Bureau of Economic Research, Inc.
  17. Orana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social preferences and the response to incentives: Evidence from personnel data," Natural Field Experiments 00212, The Field Experiments Website.
  18. Uri Gneezy & Muriel Niederle & Aldo Rustichini, 2003. "Performance In Competitive Environments: Gender Differences," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 1049-1074, August.
  19. Kate Antonovics & Peter Arcidiacono & Randall Walsh, 2009. "The Effects of Gender Interactions in the Lab and in the Field," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 152-162, February.
  20. Kate Antonovics & Peter Arcidiacono & Randall Walsh, 2005. "Games and Discrimination: Lessons From The Weakest Link," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 918-947.
  21. Lise Vesterlund & Muriel Niederle, 2004. "Do Women shy away from Competition?," Econometric Society 2004 North American Summer Meetings 652, Econometric Society.
  22. Evren Ors & Fr�d�ric Palomino & Elo�c Peyrache, 2013. "Performance Gender Gap: Does Competition Matter?," Journal of Labor Economics, University of Chicago Press, vol. 31(3), pages 443 - 499.
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Citations

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Cited by:
  1. Paserman, Daniele, 2007. "Gender Differences in Performance in Competitive Environments: Evidence from Professional Tennis Players," IZA Discussion Papers 2834, Institute for the Study of Labor (IZA).
  2. Merlino, Luca Paolo & Parrotta, Pierpaolo & Pozzoli, Dario, 2014. "Gender Differences in Sorting," Working Papers 01-2014, Copenhagen Business School, Department of Economics.
  3. Maria De Paola & Vincenzo Scoppa, 2011. "Gender Discrimination and Evaluators’ Gender: Evidence from the Italian Academy," Working Papers 201106, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  4. M. Daniele Paserman & Stefano Gagliarducci, 2011. "Gender Interactions within Hierarchies: Evidence from the Political Arena," Boston University - Department of Economics - Working Papers Series WP2011-048, Boston University - Department of Economics.
  5. Sara de la Rica & Juan J. Dolado & Raquel Vegas, 2013. "Gender Gaps in Performance Pay: New Evidence from Spain," Working Papers 2013-14, FEDEA.
  6. Anna Dreber & Emma Essen & Eva Ranehill, 2014. "Gender and competition in adolescence: task matters," Experimental Economics, Springer, vol. 17(1), pages 154-172, March.
  7. Kevin Lang & Gautam Bose, 2011. "A Theory of Monitoring and Internal Labor Markets," Boston University - Department of Economics - Working Papers Series WP2011-020, Boston University - Department of Economics.
  8. Ghazala Azmat & Barbara Petrongolo, 2014. "Gender and the Labor Market: What Have We Learned from Field and Lab Experiments?," CEP Occasional Papers 40, Centre for Economic Performance, LSE.
  9. Frick, Bernd, 2011. "Gender differences in competitiveness: Empirical evidence from professional distance running," Labour Economics, Elsevier, vol. 18(3), pages 389-398, June.
  10. Bertrand, Marianne, 2011. "New Perspectives on Gender," Handbook of Labor Economics, Elsevier.
  11. Dreber, Anna & von Essen, Emma & Ranehill, Eva, 2011. "In Bloom: Gender Differences in Preferences among Adolescents," Working Paper Series in Economics and Finance 734, Stockholm School of Economics, revised 27 Jun 2012.
  12. Pekkarinen, Tuomas, 2014. "Gender Differences in Strategic Behaviour under Competitive Pressure: Evidence on Omission Patterns in University Entrance Examinations," IZA Discussion Papers 8018, Institute for the Study of Labor (IZA).
  13. Azmat, Ghazala & Petrongolo, Barbara, 2014. "Gender and the Labor Market: What Have We Learned from Field and Lab Experiments?," IZA Discussion Papers 8135, Institute for the Study of Labor (IZA).

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