Management Accounting Section Midyear Meeting

The gender pay gap in performance-based pay: Evidence from a financial services firm

• In Event: Workplace Gender Inequality

Abstract

While most research on the gender pay gap (GPG) has focused on the impact that human capital and occupation characteristics have on wage inequalities across firms and occupations, recent evidence shows that the largest share of the GPG is caused by pay inequity within firms. In this study, we examine the main drivers of the GPG from an intra-organizational perspective, allowing us to examine the GPG at a much more granular level. In particular, we investigate how variables related to the performance management process have an impact on wage differences within a financial services firm – an industry in which gender inequalities are particularly prevalent. In doing so, we focus exclusively on performance-based pay and examine hierarchical level, job type, performance ratings, characteristics of the evaluator, and characteristics of the evaluated peers as determinants of the GPG. Analyzing 12,311 employee panel data observations over a four-year period, our results show that differences in performance-based pay strongly drive the overall GPG. The variables related to the performance management process significantly contribute to explaining this large variation in the levels and determinants of the GPG within an organization. We find significant gender differences in the impact of (i) performance ratings, (ii) characteristics of the evaluator, and (iii) characteristics of the evaluated peers, on performance-based pay.

Authors

• Claudia Marini, WU Vienna University of Economics and Business

• Isabella Grabner, WU Vienna University of Economics and Business