Closing the Gender Gap in Salary Increases: Evidence from a Field Experiment on Promoting Pay Equity

34 Pages Posted: 4 Jul 2023 Last revised: 7 Jul 2023

See all articles by Jakob Alfitian

Jakob Alfitian

University of Cologne

Marvin Deversi

Education Y

Dirk Sliwka

University of Cologne - Faculty of Management, Economics and Social Sciences; IZA Institute of Labor Economics

Abstract

We present a natural field experiment on promoting pay equity through simple modifications to the salary review process involving 623 middle managers and 8,951 subordinate employees of a large technology firm. We first document a gender gap not only in salary levels but also in salary increases. Our treatments provide for a gender-blind reallocation of the salary increase budget available to middle managers aimed at promoting pay equity, along with different variants of a corresponding decision guidance. We show that the budget reallocation combined with an explicit decision guidance, while still leaving middle managers discretion in allocating the budget, can completely eliminate the gender gap in salary increases. The treatments also do not appear to undermine the desired performance differentiation in salary increases. We thus show that simple modifications to the salary review process can go a long way toward achieving pay equity by preventing gender gaps from widening throughout employees' careers.

Keywords: gender pay gap, pay equity, randomized controlled trial, salary structure

JEL Classification: J31, J71, M52

Suggested Citation

Alfitian, Jakob and Deversi, Marvin and Sliwka, Dirk, Closing the Gender Gap in Salary Increases: Evidence from a Field Experiment on Promoting Pay Equity. IZA Discussion Paper No. 16278, Available at SSRN: https://ssrn.com/abstract=4499467 or http://dx.doi.org/10.2139/ssrn.4499467

Jakob Alfitian (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Marvin Deversi

Education Y ( email )

Dirk Sliwka

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Richard-Strauss-Str. 2
Cologne, D-50923
Germany

IZA Institute of Labor Economics ( email )

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

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

Paper statistics

Downloads
185
Abstract Views
596
Rank
340,692
PlumX Metrics