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Closing the Gender Gap in Salary Increases: Evidence from a Field Experiment on Promoting Pay Equity

Author

Listed:
  • Jakob Alfitian

    (University of Cologne, Faculty of Management, Economics, and Social Sciences. Albertus Magnus Platz, D-50923 Köln, Germany)

  • Marvin Deversi

    (Education Y)

  • Dirk Sliwka

    (University of Cologne, CESifo and IZA, Faculty of Management, Economics, and Social Sciences, Albertus Magnus Platz, D-50923 Köln, Germany)

Abstract

We present a natural field experiment on promoting pay equity through simple modifications to the salary review process involving 623 middle managers and 8,951 subordinate employees of a large technology firm.We first document a gender gap not only in salary levels but also in salary increases. Our treatments provide for a gender-neutral reallocation of the salary increase budget available to middle managers aimed at promoting pay equity, along with different variants of a corresponding decision guidance. We show that the budget reallocation combined with an explicit decision guidance, while still leaving managers discretion in allocating the budget, can completely eliminate the gender gap in salary increases. The treatments also do not appear to undermine desired performance differentiation in salary increases. We thus show that simple modifications to the salary review process can go a long way toward achieving pay equity, preventing the widening of gender gaps throughout the career.

Suggested Citation

  • Jakob Alfitian & Marvin Deversi & Dirk Sliwka, 2023. "Closing the Gender Gap in Salary Increases: Evidence from a Field Experiment on Promoting Pay Equity," ECONtribute Discussion Papers Series 244, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:244
    as

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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_244_2023.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Randomized Controlled Trial; Pay equity; Gender pay gap; Salary structure;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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