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Mind the (Gender Pay) Gap - The role of Board Gender Composition

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  • Yannis Galanakis

    (King's College London)

  • Amanda Gosling

    (University of Kent)

Abstract

We study how the share of female directors affects company-reported gender pay gaps using linked administrative data. We combine gender pay gap reports with proprietary board-composition data for 8,411 UK firms with at least 250 employees (2017–2021). Our identification uses a Bartik (1991)-style instrumental variable design that exploits regional shifts in female board representation. A one-percentage-point increase in the female director share reduces the gender pay gap by 0.043 percentage points. Moving from the current UK average to board gender parity would close about one-sixth of the reported 9.7% pay gap. The effect operates through three channels. Female directors generate asymmetric wage increases favouring women, improve female representation across pay quartiles, and ensure more equitable allocation of performance-related pay. Effects are concentrated in firms with 250-5,000 employees and are strongest when UK nationals comprise a board majority.
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Suggested Citation

  • Yannis Galanakis & Amanda Gosling, 2024. "Mind the (Gender Pay) Gap - The role of Board Gender Composition," Working Papers 045, The Productivity Institute.
    • Handle: RePEc:anj:wpaper:045
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    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • 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
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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