The Value of Skill Signals for Women's Careers
77 Pages Posted: 20 Dec 2021 Last revised: 6 Mar 2023
Date Written: December 17, 2021
We show that observable skill signals are more important for women's career advancement than for men's. Signals of higher education and professional experience increase male directors' probability to enter a leadership position by 5.9%, and their compensation by 6.8% ($291,000). Female directors with these signals are 12.9% more likely to enter a leadership position, and their compensation is 21.1% ($856,500) higher. These results are in line with models of screening discrimination, in which women need to provide more observable skill signals to make up for the fact that employers find it more difficult to judge their unobservable qualification for a leadership position. Supporting this channel, we find that our results are stronger if information asymmetries between (mostly) male employers and female candidates are larger: successions after the sudden death of a CEO, successions in firms with all-male nomination committees, and outside hires.
Keywords: Skills, Signals, Promotion, Gender
JEL Classification: A14, G34, G35, J16, J31
Suggested Citation: Suggested Citation