Women in the Pipeline : A Dynamic Decomposition of Firm Pay Gaps

This paper proposes a new decomposition method to understand how gender pay gaps arise within firms. The method accounts for pipeline effects, nonstationary environments, and dynamic interactions between pay gap components. This paper assembles a new data set covering all employees at the World Bank Group between 1987 and 2015 and shows that historical differences in the positions for which men and women were hired account for 77 percent of today's average salary difference, dwarfing the roles of entry salaries, salary growth, or retention. Forward simulations show that 20 percent of the total gap can be assigned to pipeline effects that would resolve mechanically with time.