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Dynamics of the Gender Gap for Young Professionals in the Corporate and Financial Sectors

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  • Marianne Bertrand
  • Claudia Goldin
  • Lawrence F. Katz

Abstract

This paper assesses the relative importance of various explanations for the gender gap in career outcomes for highly-educated workers in the U.S. corporate and financial sectors. The careers of MBAs, who graduated between 1990 and 2006 from a top U.S. business school, are studied to understand how career dynamics differ by gender. Although male and female MBAs have nearly identical (labor) incomes at the outset of their careers, their earnings soon diverge, with the male annual earnings advantage reaching almost 60 log points at ten to 16 years after MBA completion. We identify three proximate reasons for the large and rising gender gap in earnings: differences in training prior to MBA graduation; differences in career interruptions; and differences in weekly hours. These three determinants can explain the bulk of gender differences in earnings across the years following MBA completion. The presence of children is the main contributor to the lesser job experience, greater career discontinuity and shorter work hours for female MBAs. Some MBA mothers, especially those with well-off spouses, slow down in the labor market within a few years following their first birth. Disparities in the productive characteristics of male and female MBAs are small, but the pecuniary penalties from shorter hours and any job discontinuity are enormous for MBAs.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14681.

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Date of creation: Jan 2009
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Publication status: published as Bertrand, Marianne, Claudia Goldin, and Lawrence F. Katz. 2010. "Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors." American Economic Journal: Applied Economics, 2(3): 228-55. DOI: 10.1257/app.2.3.228
Handle: RePEc:nbr:nberwo:14681

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  1. Wolfers, Justin, 2006. "Diagnosing Discrimination: Stock Returns and CEO Gender," IZA Discussion Papers 1944, Institute for the Study of Labor (IZA).
  2. Alicia C. Sasser, 2005. "Gender Differences in Physician Pay: Tradeoffs Between Career and Family," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
  3. Light, Audrey & Ureta, Manuelita, 1995. "Early-Career Work Experience and Gender Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 121-54, January.
  4. Marianne Bertrand & Kevin F. Hallock, 2001. "The Gender gap in top corporate jobs," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(1), pages 3-21, October.
  5. Jessica Wolpaw Reyes, 2006. "Do Female Physicians Capture Their Scarcity Value? The Case of OB/GYNs," NBER Working Papers 12528, National Bureau of Economic Research, Inc.
  6. Claudia Goldin & Lawrence F. Katz, 2008. "Transitions: Career and Family Life Cycles of the Educational Elite," American Economic Review, American Economic Association, vol. 98(2), pages 363-69, May.
  7. Donna K. Ginther & Shulamit Kahn, 2009. "Does Science Promote Women? Evidence from Academia 1973-2001," NBER Chapters, in: Science and Engineering Careers in the United States: An Analysis of Markets and Employment, pages 163-194 National Bureau of Economic Research, Inc.
  8. Dan A. Black & Amelia M. Haviland & Seth G. Sanders & Lowell J. Taylor, 2008. "Gender Wage Disparities among the Highly Educated," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 630-659.
  9. Thomas Philippon & Ariell Reshef, 2009. "Wages and Human Capital in the U.S. Financial Industry: 1909-2006," NBER Working Papers 14644, National Bureau of Economic Research, Inc.
  10. Alan Manning & Joanna Swaffield, 2005. "The gender gap in early career wage growth," LSE Research Online Documents on Economics 19883, London School of Economics and Political Science, LSE Library.
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Cited by:
  1. Emilia Del Bono & Daniela Vuri, 2008. "Job Mobility and the Gender Wage Gap in Italy," CESifo Working Paper Series 2435, CESifo Group Munich.
  2. James Crotty, 2009. "The Bonus-Driven “Rainmaker” Financial Firm: How These Firms Enrich Top Employees, Destroy Shareholder Value and Create Systemic Financial Instability," UMASS Amherst Economics Working Papers 2009-13, University of Massachusetts Amherst, Department of Economics.
  3. Paul A. Grout & In-Uck Park & Silvia Sonderegger, 2009. "An Economic Theory of Glass Ceiling," The Centre for Market and Public Organisation 09/227, Department of Economics, University of Bristol, UK.
  4. Hugh Gravelle & Arne Risa Hole & Rita Santos, 2011. "Measuring and testing for gender discrimination in physician pay: English family doctors," Discussion Papers 11/05, Department of Economics, University of York.
  5. James Crotty, 2010. "The Bonus-Driven “Rainmaker” Financial Firm: How These Firms Enrich Top Employees, Destroy Shareholder Value and Create Systemic Financial Instability (revised)," Working Papers wp209_revised3, Political Economy Research Institute, University of Massachusetts at Amherst.

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