Nudging Away the Gender Pay Gap: The Role of Pay Raise Budget Framing

46 Pages Posted: 13 May 2023 Last revised: 22 Feb 2024

See all articles by Hayden T. Gunnell

Hayden T. Gunnell

Emory University

Karl Schuhmacher

Emory University - Goizueta Business School

Kristy L. Towry

Emory University

Date Written: February 21, 2024

Abstract

Progress toward eliminating the gender pay gap has slowed in the last two decades. This study examines whether a common control choice – framing pay raise budgets in percentages – inadvertently contributes to perpetuating the gender pay gap. We predict that when the pay raise budget is framed as a percentage (the percentage frame), managers anchor individual raises on that budget percentage. We propose a behavioral nudge by framing the pay raise budget as an absolute amount (the dollar frame), leading managers to anchor individual raises on an even split of the overall budget. We hypothesize and find in an experiment that the dollar frame perpetuates the gender pay gap less than the percentage frame. We also explore a salary frame that, similar to the dollar frame, leads to a reduction in the gender pay gap. Our study offers a simple, cost-effective way to limit the perpetuation of the gender pay gap.

Keywords: gender pay gap, pay raise, pay disparity, compensation, budget, framing, anchoring and adjustment

JEL Classification: D91, J16, J31, J71, M40, M52

Suggested Citation

Gunnell, Hayden and Schuhmacher, Karl and Towry, Kristy L., Nudging Away the Gender Pay Gap: The Role of Pay Raise Budget Framing (February 21, 2024). Available at SSRN: https://ssrn.com/abstract=4445663 or http://dx.doi.org/10.2139/ssrn.4445663

Hayden Gunnell (Contact Author)

Emory University ( email )

Goizueta Business School
1300 Clifton Road
Atlanta, GA 30322
United States

Karl Schuhmacher

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Kristy L. Towry

Emory University ( email )

Goizueta Business School
1300 Clifton Road
Atlanta, GA 30322
United States
404-727-4895 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
164
Abstract Views
699
Rank
368,018
PlumX Metrics