Of Age, Sex, and Money: Insights from Corporate Officer Compensation on the Wage Inequality between Genders

Abstract

This paper shows that the gender and age of the wage-setter are crucial determinants of the disparity in wages between sexes. We document our findings using a dataset on compensation of corporate officers that is uniquely suited for this analysis because officer wages are set by chief executive officers. We show that CEOs pay officers of the opposing gender less than officers of their own gender, even when controlling for job characteristics. Older and male CEOs exhibit the greatest propensity to differentiate on the basis of sex. Female officers receive smaller raises if the firm is headed by a man. Our results suggest that CEO gender and age are economically more important determinants of officer compensation than are firm stock performance, stock volatility or return on assets.

Keywords: gender, officer compensation, wage inequality, pay gap, discrimination

JEL Classification: G30, J31, J16, J70, M12, M50