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The gender pay gap in top corporate jobs in Denmark: Glass ceilings, sticky floors or both?

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  • Nina Smith
  • Valdemar Smith
  • Mette Verne

Abstract

Purpose - This study aims to analyse the gender pay gap among CEOs, VPs and potential top executives. The authors seek to analyse how much of the gap is explained by differences in individual characteristics and how much is explained by firm characteristics and discriminatory processes. Design/methodology/approach - The paper estimates compensation functions based on a panel of employer-employee data set covering all Danish companies in the private sector with more than 50 employees during the period 1996-2005. Findings - The authors document that when controlling for a large number of observable characteristics and time-invariant characteristics, there still exists a large gender compensation gap among top executives in Denmark. For VP and potential top executives, the estimated gap increased during the period 1996-2005 while for the small and selected group of CEOs, the corrected gender gap decreased slightly. Research limitations/implications - The study does not claim to identify causal links between top executive compensation and individual or firm specific background characteristics. Practical implications - The extension of the family-friendly schemes may have had negative boomerang effects on the compensation and careers of all women, irrespective of whether they become mothers or not. Especially for those women aiming to reach the top of the organisation, these effects may be important because potential career interruptions are expected to be more severe for this group. Originality/value - This study adds to the limited empirical literature on the gender pay gap among the narrow group of top executives using a large panel employer-employee data set of all Danish companies.

Suggested Citation

  • Nina Smith & Valdemar Smith & Mette Verne, 2011. "The gender pay gap in top corporate jobs in Denmark: Glass ceilings, sticky floors or both?," International Journal of Manpower, Emerald Group Publishing, vol. 32(2), pages 156-177, May.
  • Handle: RePEc:eme:ijmpps:v:32:y:2011:i:2:p:156-177
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    References listed on IDEAS

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    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Nina Smith & Valdemar Smith & Mette Verner, 2005. "Do Women in Top Management Affect Firm Performance? A Panel Study of 2500 Danish Firms," CIE Discussion Papers 2005-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    3. Lundberg, Shelly, 2005. "Men and islands: Dealing with the family in empirical labor economics," Labour Economics, Elsevier, vol. 12(4), pages 591-612, August.
    4. Booth, Alison L., 2009. "Gender and competition," Labour Economics, Elsevier, vol. 16(6), pages 599-606, December.
    5. David Bjerk, 2008. "Glass Ceilings or Sticky Floors? Statistical Discrimination in a Dynamic Model of Hiring and Promotion," Economic Journal, Royal Economic Society, vol. 118(530), pages 961-982, July.
    6. Nabanita Datta Gupta & Nina Smith & Leslie S. Stratton, 2007. "Is Marriage Poisonous? Are Relationships Taxing? An Analysis of the Male Marital Wage Differential in Denmark," Southern Economic Journal, Southern Economic Association, vol. 74(2), pages 412-433, October.
    7. Muriel Niederle & Lise Vesterlund, 2007. "Do Women Shy Away From Competition? Do Men Compete Too Much?," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1067-1101.
    8. B. Burcin Yurtoglu & Christine Zulehner, 2007. "The gender wage gap in top corporate jobs is still there," Vienna Economics Papers 0701, University of Vienna, Department of Economics.
    9. Eriksson, Tor, 1999. "Executive Compensation and Tournament Theory: Empirical Tests on Danish Data," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 262-280, April.
    10. Siri Terjesen & Val Singh, 2008. "Female Presence on Corporate Boards: A Multi-Country Study of Environmental Context," Journal of Business Ethics, Springer, vol. 83(1), pages 55-63, November.
    11. Eriksson, T., 2001. "How Common Are The New Compensation and Work Organization Practices and Who Adopts Them?," Papers 01-8, Aarhus School of Business - Department of Economics.
    12. Anne Busch & Elke Holst, 2009. "Glass Ceiling Effect and Earnings: The Gender Pay Gap in Managerial Positions in Germany," Discussion Papers of DIW Berlin 905, DIW Berlin, German Institute for Economic Research.
    13. Plümper, Thomas & Troeger, Vera E., 2007. "Efficient Estimation of Time-Invariant and Rarely Changing Variables in Finite Sample Panel Analyses with Unit Fixed Effects," Political Analysis, Cambridge University Press, vol. 15(02), pages 124-139, March.
    14. Lazear, Edward P & Rosen, Sherwin, 1990. "Male-Female Wage Differentials in Job Ladders," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 106-123, January.
    15. 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.
    16. 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.
    17. Jurajda, Stepán & Paligorova, Teodora, 2009. "Czech female managers and their wages," Labour Economics, Elsevier, vol. 16(3), pages 342-351, June.
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    Citations

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    Cited by:

    1. Kunze, Astrid, 2013. "Gender differences in career progression: Does the effect of children capture low work effort?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79705, Verein für Socialpolitik / German Economic Association.
    2. Magdalena Smyk & Joanna Tyrowicz & Barbara Liberda, 2014. "Age-productivity patterns in talent occupations for men and women: a decomposition," Post-Communist Economies, Taylor & Francis Journals, vol. 26(3), pages 401-414, September.
    3. Merlino L.P. & Parrotta P. & Pozzoli D., 2014. "Gender differences in sorting," Research Memorandum 022, Maastricht University, Graduate School of Business and Economics (GSBE).
    4. Frederiksen, Anders & Kato, Takao, 2011. "Human Capital and Career Success: Evidence from Linked Employer-Employee Data," IZA Discussion Papers 5764, Institute for the Study of Labor (IZA).
    5. Mohan, Nancy, 2014. "A review of the gender effect on pay, corporate performance and entry into top management," International Review of Economics & Finance, Elsevier, vol. 34(C), pages 41-51.
    6. Marco Biagetti & Sergio Scicchitano, 2011. "A note on the gender wage gap among managerial positions using a counterfactual decomposition approach: sticky floor or glass ceiling?," Applied Economics Letters, Taylor & Francis Journals, vol. 18(10), pages 939-943.
    7. repec:bla:acctfi:v:57:y:2017:i:3:p:789-813 is not listed on IDEAS
    8. Smith, Nina & Smith, Valdemar & Verner, Mette, 2011. "Why Are So Few Females Promoted into CEO and Vice-President Positions? Danish Empirical Evidence 1997-2007," IZA Discussion Papers 5961, Institute for the Study of Labor (IZA).
    9. Sergio Scicchitano, 2015. "Exploring the gender wage gap in the managerial labour market:a counterfactual decomposition analysis," Working Papers 2, Department of the Treasury, Ministry of the Economy and of Finance.
    10. Lam, Kevin C.K. & McGuinness, Paul B. & Vieito, João Paulo, 2013. "CEO gender, executive compensation and firm performance in Chinese‐listed enterprises," Pacific-Basin Finance Journal, Elsevier, vol. 21(1), pages 1136-1159.
    11. Luca Paolo Merlino & Pierpaolo Parrotta & Dario Pozzoli, 2012. "Assortative Matching Gender," Working Papers ECARES ECARES 2012-040, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Chief executives; Gender; Glass ceilings; Pay structures; Denmark;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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