The Old Boy Network: Gender Differences in the Impact of Social Networks on Remuneration in Top Executive Jobs

54 Pages Posted: 1 Nov 2011

See all articles by Marie Lalanne

Marie Lalanne

University of Turin - Collegio Carlo Alberto

Paul Seabright

University of Toulouse I - Industrial Economic Institute (IDEI); Centre for Economic Policy Research (CEPR)

Date Written: October 2011

Abstract

Using an original dataset describing the career history of some 16,000 senior executives and members of the non-executive board of US, UK, French and German companies, we investigate gender differences in the use of social networks and their impact on earnings. There is a large gender wage gap: women (who make up 8.8% of our sample) earned average salaries of $168,000 in 2008, only 70% of the average $241,000 earned by men. This is not due to differences in age, experience or education levels. Women are more likely than men to be non-executives, whose salaries are lower; nevertheless, a substantial gender gap still exists among executives. We construct measures of the number of currently influential people each individual has encountered previously in his or her career. We find that executive men's salaries are an increasing function of the number of such individuals they have encountered in the past while women's are not. Controlling for this discrepancy, there is no longer a significant gender gap among executives. These findings are robust to the use of different years, to the use of salaried versus non-salaried remuneration, and to the use of panel estimation to control rigorously for unobserved individual heterogeneity. In contrast to executives, the salaries of non-executive board members do not display a significant gender wage gap, nor any gender difference in the effectiveness with which men and women leverage their links into salaries. This suggests that adoption of gender quotas for board membership, as has been enacted or proposed recently in several European countries, is unlikely to reduce the gender gap in earnings so long as such quotas do not distinguish between executive and non-executive board members.

Keywords: executive compensation, gender wage gap, social networks

JEL Classification: A14, J16, J31, J33

Suggested Citation

Lalanne, Marie and Seabright, Paul, The Old Boy Network: Gender Differences in the Impact of Social Networks on Remuneration in Top Executive Jobs (October 2011). CEPR Discussion Paper No. DP8623, Available at SSRN: https://ssrn.com/abstract=1952484

Marie Lalanne (Contact Author)

University of Turin - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

Paul Seabright

University of Toulouse I - Industrial Economic Institute (IDEI) ( email )

Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France
+33 5 61 12 86 17 (Phone)
+33 5 61 12 86 37 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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