Gender and Dynamic Agency: Theory and Evidence on the Compensation of Female Top Executives
AbstractSurvey and experimental evidence point to the existence of a pervasive set of culturally-related barriers. These include lack of mentoring and role models, exclusion from informal networks, gender based stereotyping, display of style different than the organizational norms, difficulties in engaging in negotiations and inhospitable corporate culture. Based on this evidence, we consider two alternative hypotheses regarding possible determinants of gender differences in the structure of compensation. The first hypothesis is that female executives have lower impact. Specifically, we allow for a lower effect of effort on the probability of high profits for female executives (probability-impact). Alternatively, we consider the case where for given effort, female executives give rise to higher volatility in firm profits (productivity-impact). The second hypothesis is that female executives have lower effectiveness - that is, they have a smaller role in the determination of a firm's profits, for a given impact of their effort. We find that the version of the model in which female executives have lower effectiveness is consistent with the observed gender differences in the structure of executive compensation. The version with lower impact fails to replicate, among the other things, the lower fraction of performance pay earned by female executives.
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Bibliographic InfoPaper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2006-061.
Date of creation: Nov 2006
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Other versions of this item:
- Claudia Olivetti & Stefania Albanesi, 2007. "Gender And Dynamic Agency: Theory And Evidence On The Compensation Of Female Top Executives," 2007 Meeting Papers 894, Society for Economic Dynamics.
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