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Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments

Author

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  • Oriana Bandiera
  • Greg Fischer
  • Andrea Prat
  • Erina Ytsma

Abstract

Existing empirical work raises the hypothesis that performance pay—whatever its output gains—may widen the gender earnings gap because women may respond less to incentives. We evaluate this possibility by aggregating evidence from existing experiments on performance incentives with male and female subjects. Using a Bayesian hierarchical model, we estimate both the average effect and heterogeneity across studies. We find that the gender response difference is close to zero and heterogeneity across studies is small, while performance pay increases output by 0.36 standard deviations on average. The data thus support agency theory for men and women alike.

Suggested Citation

  • Oriana Bandiera & Greg Fischer & Andrea Prat & Erina Ytsma, 2021. "Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 435-454, December.
    • Handle: RePEc:aea:aerins:v:3:y:2021:i:4:p:435-54
    DOI: 10.1257/aeri.20200466
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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • 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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