Intra-Firm Hierarchies and Gender Gaps

Abstract

We study how changes in female representation at the top of a firm’s organisation affect gender-specific outcomes across hierarchies within firms. We start by developing a theoretical model of a hierarchical firms, where gender representation in top organisational layers can affect gender-specific hiring and promotion probabilities at lower layers. We then exploit a recent French reform that imposed gender representation quotas in the boards of directors and test the model’s predictions in the data. Our empirical results show that the reform was successful in reducing gender wage and representation gaps at the upper layers of the firm, but not at lower firm layers. A Panel VAR analysis confirms that the trickle-down effect of this policy was limited and suggests that interventions targeting the managerial layer, rather than the board, might have a more generalised effect across the firm.

Keywords: Gender Gap, Firm Organisation, Gender Quota, Trickle-Down Effect

JEL Classification: G38, J16, J3, L2