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Incentive pay and gender gaps in the Nordic countries

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  • Westling, Tatu

Abstract

This paper explores the effect of incentive pay on gender pay gaps in Finland, Norway and Sweden among professionals and managers within MNCs. Mercer 2009 Total Remuneration Survey data is utilised. Uniform job ladder, occupation, industry and wage definitions enable consistent cross-country comparisons. In addition to the between-country variation, the within-country variation of gender gap with respect to incentive pay is analysed. The results indicate that gender pay gaps differ among the Nordics and that occupation and industry controls have dissimilar effects across countries. Irrespective of wage element, Finland and Norway are characterised by higher gender gaps than Sweden. Incentives tend to accentuate gender pay gaps. In intention to alleviate the absence of job performance data, this study utilises a rudimentary, promotion-based measure for job performance. In Finland it does affect the gender gap. However, irrespective of gender, high-performers are penalised in Sweden but not in Finland or Norway. The Finnish data also allows the identification of low-performers. Low job performance is rewarded in Finland. Nonetheless, the job performance findings should be interpreted with cautions.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33083.

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Date of creation: 31 Aug 2011
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Handle: RePEc:pra:mprapa:33083

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Keywords: Wage differential; incentive pay; job ladder; gender; job performance;

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  1. Kahn, Lawrence M., 2010. "Labor Market Policy: A Comparative View on the Costs and Benefits of Labor Market Flexibility," IZA Discussion Papers 5100, Institute for the Study of Labor (IZA).
  2. Rosholm, Michael & Smith, Nina, 1996. "The Danish Gender Wage Gap in the 1980s: A Panel Data Study," Oxford Economic Papers, Oxford University Press, vol. 48(2), pages 254-79, April.
  3. Pekkarinen, Tuomas & Riddell, Chris, 2006. "Performance Pay and Earnings: Evidence from Personnel Records," IZA Discussion Papers 2253, Institute for the Study of Labor (IZA).
  4. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2007. "Is There a Glass Ceiling over Europe? Exploring the Gender Pay Gap across the Wage Distribution," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(2), pages 163-186, January.
  5. Tuomas Pekkarinen & Juhana Vartiainen, 2006. "Gender differences in promotion on a job ladder: Evidence from Finnish metalworkers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(2), pages 285-301, January.
  6. McKinley L. Blackburn & David Neumark, 1991. "Omitted-Ability Bias and the Increase in the Return to Schooling," NBER Working Papers 3693, National Bureau of Economic Research, Inc.
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