Slide 1

Today I'll be presenting research by Marianne Bertrand and Kevin Hallock on 'The Gender
Gap in Top Corporate Jobs.'
- Study from 2001 examined gender-based compensation differences among top
executives during the 1990s.
- provides important insights into both the existence and causes of gender wage
disparities at the highest levels of corporate America
so, let’s dive into why this research matters and what they discovered.
Slide 2

The central question this paper addresses is What explains the gender gap in compensation
among top corporate executives?

Research concerns: practical + academic.

Academic:

- First comprehensive study to examine gender pay gaps specifically at the executive
level. Previous research had focused on other professional fields like law and
academia, so this study filled a significant gap in our understanding.

Practical

- There was growing policy interest in the early 2000s about gender disparities in
corporate leadership.

Important challenges: historically, there had been limited data available on executive
compensation, and women represented a very small percentage of corporate leaders at that
time

Slide 3:

Actually, before diving into the methodology, it is important to highlight the key challenges
that the researchers faced

1) Lack of comprehensive data till 1990’s which made it difficult to address the gaps.
2) Women were severely underrepresented – only 2.4 percent.
3) How to understand the wage differences and decompose it?

Finally, always a challenge to distinguish between explainable factors and potential

discrimination. These are some of the things that they addressed.

Slide 4:

For the purpose of the research, the authors used two data sources.
Standard & Poor's ExecuComp,

The main dataset came from this covering the years 1992 to 1997. This dataset provided
unprecedented detail on executive compensation, including base salary, bonuses, and stock
options. This dataset covered companies in the S&P 500, Midcap 400, and SmallCap 600
indices.

Current Population Survey

Used as a secondary source, which helped them analyze the broader managerial population
and cross-verify their findings.

- In which 1,134 – or about 2.4% – were female executives

Question is why these data sources?

They contained mandatory public disclosure information, ensuring consistent reporting

standards across companies. The robust sample size allowed for sophisticated statistical
analysis despite the small percentage of female executives.

Slide 5:

To understand the wage gap, the researchers used a technique called Oaxaca decomposition.
- Explained and unexplained components

This equation may look intimidating, but the concept is straightforward. The Greek letter
Delta w represents the wage difference between men and women.

The terms on the right side break this difference into components that can be attributed to
various factors.

Looking at the male wage structure baseline equation, the first term (alpha-m minus alpha-
f) represents basic intercept differences.

The second term shows coefficient differences weighted by female characteristics. The
third term applies the male wage structure to characteristic differences between genders.

- The female wage structure baseline equation works similarly but uses female wage
characteristics as the reference point.

Slide 6:

Now let's look at the empirical approach – how the researchers actually analysed the data

Their baseline regression model is shown here. It looks at how the natural logarithm of
compensation is affected by gender, with various control variables included to isolate
gender's specific impact

Look at the flowchart:

They began with a simple model that only considered gender. Then they progressively added
more complexity:

 First, they controlled for firm size

 Then they added industry-specific fixed effects to account for differences across
sectors
 Next came occupational variables to capture differences in roles and responsibilities
 Finally, they incorporated individual characteristics like age and tenure

This step-by-step approach allowed them to see exactly how much each factor contributed to
explaining the gender pay gap.

For their identification strategy, they focused on controlling for observable characteristics and
performed multiple specification checks to ensure their results were robust and reliable.

This careful approach is what makes the study's findings so valuable and credible

Slide 7:

Before breaking down the causes, let's look at the raw gender pay gap the researchers
discovered

The unconditional gender pay gap among executives was 45%. This means that, without
accounting for any other factors, female executives earned 45% less than their male
counterparts during this period. When controlling for just the year of observation, the gap
remained virtually unchanged at 44%.

However, the study also found significant differences between male and female executives
that might explain some of this gap:

Female executives typically managed smaller firms, which naturally pay less regardless of
gender. This factor alone accounts for about 15 percentage points of the pay gap.

Female executives were approximately 5 years younger on average than their male
counterparts. Since compensation typically increases with age and experience, this age
difference contributes to the pay gap.

Female executives also had about 5.6 fewer years of firm-specific experience. This reduced
tenure affects compensation through seniority effects and accumulated expertise.

The title distribution was also skewed, with women significantly underrepresented in the
highest-paying CEO and Chair positions.

It's important to note that even with this large initial 45% gap, the researchers found that most
of it could be attributed to these observable characteristics.

This challenges simplistic discrimination narratives while still highlighting structural

barriers that women face in reaching the highest-paying executive positions
Slide 8:

Now let's examine how the researchers decomposed this 45% raw gender gap

This waterfall chart shows how different factors contribute to explaining the gender wage
gap. Starting with the 45% raw gap on the left, we can see how each factor reduces the
unexplained portion.

Firm size has a substantial impact, accounting for about 15 percentage points of the gap. This
makes sense since compensation is strongly tied to company size, and female executives were
more likely to work at smaller firms.

The scarcity of women in CEO and Chair positions explains another 13% of the gap. These
top positions command the highest salaries, and women were significantly underrepresented
in them during this period.

After accounting for all observable factors, only 12-29% of the wage gap remains
unexplained. This unexplained portion could potentially reflect discrimination, but could also
include unmeasured factors not captured in the data.

Overall, the Oaxaca decomposition showed that 71-88% of the gender wage gap could be
explained by observable characteristics – primarily firm size, occupational segregation, and
experience differences

Slide 9:

One of the most encouraging findings from this study was the positive trend in gender
equality over the study period.

Female executive representation nearly tripled during this five-year period, growing from just
1.29% in 1992 to 3.39% by 1997.

Similarly, the percentage of firms with at least one female executive increased dramatically,
from 5.4% in 1992 to 15.03% by 1997. This means that by 1997, about one in seven firms in
the sample had at least one woman in their executive ranks.

The compensation ratio also improved significantly. In 1992, female executives earned only
52% of what their male counterparts earned. By 1997, this ratio had improved to 73% – a 21-
percentage point improvement in just five years.

Slide 10:

Let’s turn to the key findings of this research

The most significant finding is that the majority of wage differences between male and
female executives – between 71% and 88% – could be explained by observable
characteristics. These included firm size, occupational segregation, and experience
differences.
The researchers also documented significant progress during the study period from 1992 to
1997, with representation increasing and the wage gap narrowing.

Despite this progress, structural barriers remained important factors. Women were still
significantly underrepresented in top positions, especially as CEOs and board chairs.

The findings suggest several areas where organizations might focus their efforts:

 Early career development programs to help women accumulate experience at the

same rate as men
 Greater transparency in promotion paths to ensure equal opportunities
 Targeted interventions addressing the structural barriers that prevent women from
reaching the highest executive levels

Slide 11:

Lastly to the contributions and some of the limitations

The study validated wage gap decomposition methodologies in a new context and challenged
simplistic discrimination narratives by revealing the complex factors at play.

Limitation:

However, the study also had several limitations. It focused exclusively on public companies,
potentially limiting the generalizability of findings to private firms

Future research:

The authors suggested several directions for future research, including extended temporal
analysis to track changes over longer periods, comparative studies of private sector firms and
other.

Slide 12:
Thank you for your attention. Happy to take any questions you guys might have.