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

Management Science, Forthcoming

43 Pages Posted: 30 Apr 2014 Last revised: 16 May 2014

See all articles by David Newton

David Newton

Concordia University, Quebec - Department of Finance

Mikhail Simutin

University of Toronto - Rotman School of Management

Date Written: March 21, 2014

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

Suggested Citation

Newton, David and Simutin, Mikhail, Of Age, Sex, and Money: Insights from Corporate Officer Compensation on the Wage Inequality between Genders (March 21, 2014). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2430781 or http://dx.doi.org/10.2139/ssrn.2430781

David Newton

Concordia University, Quebec - Department of Finance ( email )

Montreal, Quebec H3G 1M8
Canada

Mikhail Simutin (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/simutin

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