Female Leadership and Gender Equity: Evidence from Plant Closure

Abstract:     
We measure the impact of female leadership on the relative pay of men and women in their firms. We use unique worker-plant matched panel data to measure differences in the wage changes experienced by newly hired workers displaced from closing plants. We correct for endogenous selection, comparing the wage changes of men and women who move from the same closing plant to the same new firm. We observe larger wage losses among women than men immediately upon re-entering the workforce and continuing for the following three years. A woman making $30,000 would lose between $1,200 and $1,500 relative to a man displaced from the same plant and hired by the same firm. However, we find a significantly smaller gap in hiring firms with female leadership: the magnitude of the extra losses to women is cut in half. The result is robust to including hiring firm fixed effects – a firm pays more equal wages to newly hired workers when it has women in power. Our results suggest an important externality to having women in leadership positions: they cultivate more female-friendly cultures inside their firms.

Number of Pages in PDF File: 40

Keywords: Leadership, Gender Equity

JEL Classification: G30, J30

working papers series