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Not Just a Formality: Pay System Formalization and Sex-Related Earnings Effects

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  • Marta M. Elvira

    (INSEAD, Boulevard de Constance, Fontainebleau Cedex, 77305 France, and the Graduate School of Management, University of California, Irvine, California 92697-3125)

  • Mary E. Graham

    (School of Business, Clarkson University, P.O. Box 5790, Potsdam, New York 13699-5790)

Abstract

Drawing on neoclassical economic, internal labor market, and devaluation theories, we examine how the sex composition of jobs and the sex of individual workers affect earnings, depending upon the formalization of the pay type. Using personnel data for over 8,000 employees, we confirm the existence of a negative relationship between earnings and the proportion female in a job. We also find that for less-formalized pay types (cash incentive bonuses), sex-composition and individual-sex effects are larger than for more formalized pay (merit raises and base salary). Together, these findings support devaluation explanations, suggest that incentive bonuses may widen the earnings gap between women and men, and have implications for the design of pay structures in organizations.

Suggested Citation

  • Marta M. Elvira & Mary E. Graham, 2002. "Not Just a Formality: Pay System Formalization and Sex-Related Earnings Effects," Organization Science, INFORMS, vol. 13(6), pages 601-617, December.
    • Handle: RePEc:inm:ororsc:v:13:y:2002:i:6:p:601-617
    DOI: 10.1287/orsc.13.6.601.499
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    Cited by:

    1. Cron, William L. & Gilly, Mary C. & Graham, John L. & Slocum Jr., John W., 2009. "Gender differences in the pricing of professional services: Implications for income and customer relationships," Organizational Behavior and Human Decision Processes, Elsevier, vol. 109(1), pages 93-105, May.
    2. Jiyin Cao & Edward Bishop Smith, 2021. "Why Do High-Status People Have Larger Social Networks? Belief in Status-Quality Coupling as a Driver of Network-Broadening Behavior and Social Network Size," Organization Science, INFORMS, vol. 32(1), pages 111-132, January.
    3. Fidan Ana Kurtulus & Donald Tomaskovic-Devey, 2012. "Do Female Top Managers Help Women to Advance? A Panel Study Using EEO-1 Records," The ANNALS of the American Academy of Political and Social Science, , vol. 639(1), pages 173-197, January.
    4. Kurtulus, Fidan Ana & Tomaskovic-Devey, Donald, 2012. "Do Women Top Managers Help Women Advance? A Panel Study Using EEO-1 Records," IZA Discussion Papers 6444, Institute of Labor Economics (IZA).
    5. Isabel Fernandez-Mateo & Sarah Kaplan, 2018. "Gender and Organization Science: Introduction to a Virtual Special Issue," Organization Science, INFORMS, vol. 29(6), pages 1229-1236, December.
    6. Sylvia Fuller & Lynn Prince Cooke, 2018. "Workplace Variation in Fatherhood Wage Premiums: Do Formalization and Performance Pay Matter?," Work, Employment & Society, British Sociological Association, vol. 32(4), pages 768-788, August.
    7. Christian Fieseler & Eliane Bucher & Christian Pieter Hoffmann, 2019. "Unfairness by Design? The Perceived Fairness of Digital Labor on Crowdworking Platforms," Journal of Business Ethics, Springer, vol. 156(4), pages 987-1005, June.
    8. Juho Jokinen & Jaakko Pehkonen, 2017. "Promotions and Earnings – Gender or Merit? Evidence from Longitudinal Personnel Data," Journal of Labor Research, Springer, vol. 38(3), pages 306-334, September.
    9. Maura A. Belliveau, 2005. "Blind Ambition? The Effects of Social Networks and Institutional Sex Composition on the Job Search Outcomes of Elite Coeducational and Women’s College Graduates," Organization Science, INFORMS, vol. 16(2), pages 134-150, April.
    10. John S. Heywood & Daniel Parent, 2017. "Performance Pay, the Gender Gap, and Specialization within Marriage," Journal of Labor Research, Springer, vol. 38(4), pages 387-427, December.
    11. Nishtha Langer & Ram D. Gopal & Ravi Bapna, 2020. "Onward and Upward? An Empirical Investigation of Gender and Promotions in Information Technology Services," Information Systems Research, INFORMS, vol. 31(2), pages 383-398, June.
    12. Anna Ruzik & Magdalena Rokicka, 2010. "The Gender Pay Gap in Informal Employment in Poland," CASE Network Studies and Analyses 406, CASE-Center for Social and Economic Research.
    13. Emilio J. Castilla, 2015. "Accounting for the Gap: A Firm Study Manipulating Organizational Accountability and Transparency in Pay Decisions," Organization Science, INFORMS, vol. 26(2), pages 311-333, April.
    14. Janssens, Maddy & Zanoni, Patrizia, 2014. "Alternative diversity management: Organizational practices fostering ethnic equality at work," Scandinavian Journal of Management, Elsevier, vol. 30(3), pages 317-331.
    15. Oc, Burak & Netchaeva, Ekaterina & Kouchaki, Maryam, 2021. "It’s a man’s world! the role of political ideology in the early stages of leader recruitment," Organizational Behavior and Human Decision Processes, Elsevier, vol. 162(C), pages 24-41.
    16. Emilio J. Castilla & Aruna Ranganathan, 2020. "The Production of Merit: How Managers Understand and Apply Merit in the Workplace," Organization Science, INFORMS, vol. 31(4), pages 909-935, July.
    17. Maura A. Belliveau, 2012. "Engendering Inequity? How Social Accounts Create vs. Merely Explain Unfavorable Pay Outcomes for Women," Organization Science, INFORMS, vol. 23(4), pages 1154-1174, August.
    18. Kevin Stainback & Soyoung Kwon, 2012. "Female Leaders, Organizational Power, and Sex Segregation," The ANNALS of the American Academy of Political and Social Science, , vol. 639(1), pages 217-235, January.
    19. Emilio J. Castilla, 2012. "Gender, Race, and the New (Merit-Based) Employment Relationship," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51, pages 528-562, April.
    20. Adina D. Sterling & Roberto M. Fernandez, 2018. "Once in the Door: Gender, Tryouts, and the Initial Salaries of Managers," Management Science, INFORMS, vol. 64(11), pages 5444-5460, November.
    21. Khadija Straaten & Niccolò Pisani & Ans Kolk, 2020. "Unraveling the MNE wage premium," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1355-1390, December.

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