Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments

56 Pages Posted: 3 Jan 2017

See all articles by Oriana Bandiera

Oriana Bandiera

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Greg Fischer

London School of Economics & Political Science (LSE) - Department of Economics

Andrea Prat

Columbia Business School - Finance and Economics; Centre for Economic Policy Research (CEPR)

Erina Ytsma

MIT Sloan School of Management - IDE

Date Written: December 2016

Abstract

Performance pay increases productivity but also earnings inequality. Can it widen the gender gap because women are less responsive? We provide answers by aggregating evidence from existing experiments on performance pay that have both male and female subjects, regardless of whether they test for gender differences. We develop a Bayesian hierarchical model (BHM) that allows us to estimate both the average effect and the heterogeneity across studies. We find that the gender response difference is close to zero and heterogeneity across studies is small. We also find that the average effect of performance pay is positive, increasing output by 0.28 standard deviations. The data are thus strongly supportive of agency theory for men and women alike.

Keywords: econometrics, Gender, meta-analysis, wage differentials

JEL Classification: C11, J16, J31

Suggested Citation

Bandiera, Oriana and Fischer, Greg and Prat, Andrea and Ytsma, Erina, Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments (December 2016). CEPR Discussion Paper No. DP11724, Available at SSRN: https://ssrn.com/abstract=2893078

Oriana Bandiera (Contact Author)

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7519 (Phone)
+44 20 7055 6951 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Greg Fischer

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Andrea Prat

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Erina Ytsma

MIT Sloan School of Management - IDE ( email )

245 First Street
Room E94-1518D
Cambridge, MA 02142
United States

HOME PAGE: http://bit.ly/erinaytsma

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