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Understanding the Gender Pay Gap: Whats Competition Got to Do with It?

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Author Info
Alan Manning
Farzad Saidi

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Abstract

A number of papers have recently argued that men and women have different attitudes andbehavioural responses to competition. Laboratory experiments suggest that these genderdifferences are very large but it is important to be able to map these findings into real worlddifferences. In this paper, we use performance pay as an indicator of competition in theworkplace and compare the gender gap in incidence of performance pay and earnings andwork effort under these contracts. Women are less likely to found in performance paycontracts but the gender gap is small. Furthermore, the effect of performance pay on earningsis modest and does not differ markedly by gender. Consequently the ability of these theoriesto explain the gender pay gap seems very limited.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0898.

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Date of creation: Nov 2008
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Handle: RePEc:cep:cepdps:dp0898

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Related research
Keywords: Gender Pay gap; Performance Pay;

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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  1. 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. [Downloadable!] (restricted)
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    Other versions:
  3. 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, October. [Downloadable!] (restricted)
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  5. 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. [Downloadable!] (restricted)
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  8. Alan Manning & Joanna Swaffield, 2005. "The Gender Gap in Early Career Wage Growth," CEP Discussion Papers dp0700, Centre for Economic Performance, LSE. [Downloadable!]
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  9. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 917-962, August.
    Other versions:
  10. George J. Borjas, 1981. "Job mobility and earnings over the life cycle," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(3), pages 365-376, April.
  11. 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). [Downloadable!] (restricted)
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    Other versions:
  17. Thomas Dohmen & Armin Falk, 2006. "Performance Pay and Multi-dimensional Sorting: Productivity, Preferences and Gender," IZA Discussion Papers 2001, Institute for the Study of Labor (IZA). [Downloadable!]
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    Other versions:
  19. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier. [Downloadable!] (restricted)
    Other versions:
  20. 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. [Downloadable!] (restricted)
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