Research Findings

Gender of the immediate manager and women’s wages

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May 8, 2019

Improving women’s position in society, particularly in the labor market, ranks high on the political agenda in many countries. One policy under debate is implementing gender quotas in top positions or on corporate boards. Also the vice president of the European Commission in 2012 has proposed legislation enforcing such gender quotas in all European countries.

The underlying argument is generally that the gender of the manager, or the gender composition at the managerial level, affects career prospects of female employees. Thus, increased representation of women at higher levels within firms is often assumed to improve wages and career advancement of women.

This can be through preferences of the manager such as homophily – implying a preference to interact with individuals with similar characteristics, i.e., as regards gender. Or through productivity-enhancing effects due to better communication and mentoring. Alternatively an increased female representation contributes by firm structures becoming more family-friendly.

Most of the previous literature finds either a positive or no association between the female representation at the managerial level, executive or board-room levels and female employees’ wages. Studies on the gender wage gap similarly find positive or no association between female management representation and female employees’ wages.

Woman as immediate manager

In a recent paper, we contribute to the field by first evaluating the association between the gender of the immediate manager, that is, the manager to whom the employee reports working directly for, and wages of female employees. Doing so provides an advantage since the immediate manager presumably is well informed about the employee’s productivity and preferences, but also, if preferences, productivity enhancement, or influence on firm structure by manager gender play a role in management, these would arguably be most prominent for the direct subordinate.

Importantly, we also differentiate between immediate managers at the highest level of an establishment (e.g., a CEO, small business owner, etc.) and managers being below this level of management. This is an important distinction because the impact of individual management may be different at different organizational levels.

We show that having a female manager instead of a male manager is negatively associated with female employees’ wages. However, dividing the sample by manager position, and thus presumably by the degree of managerial influence on employee outcomes, we find that the negative association pertains only to those who work for a lower-level female manager.

On average and unadjusted, female employees with a female manager have 8.3% lower wages than employees with a male manager. Dividing the sample by manager position, the uncorrected difference varies by manager position. Among female employees with a manager at the highest level of management, there is no significant difference in wages by manager gender, whereas female employees with a mid-level female manager have 12.4% lower wages compared to women working under a male mid-level manager.

When adjusting for employee and establishment-specific characteristics as well as that female managers are more common in low-wage female-dominated occupations, the difference get smaller, but are still statistically significant among employees with a mid-level manager.

Non-cognitive traits?

Is the negative association between having a female immediate manager and wages driven by an unmeasured ability or productivity selection, implying that some organizations or, in particular, male managers would attract (or be able to choose) female workers with an especially high productive capacity?

The non-cognitive traits are first assessed using measures that aim to capture the Big Five personality traits, commonly denoted as OCEAN, which describe an individual’s degree of openness, conscientiousness, extroversion, agreeableness, and neuroticism. Our second measures of non-cognitive traits follow from three questions that capture respondents’ attitudes toward work: the willingness to lead, the willingness to exert effort or perseverance, and work commitment.

Although some of our measures of non-cognitive traits differ by manager position, the negative association between wages and having a female manager versus a male manager changes only slightly when accounting for the employees’ non-cognitive traits at both levels of management. Overall, the coefficient for having a female manager is negative and statistically significant at the lower level of management, while it is negative and insignificant at the highest level.

Female-friendly work practices?

The negative association between having a female immediate manager and wages could also be due to female managers possibly employing more female-friendly work practices and thereby attracting employees with higher family commitments compared to male managers.

Adding family commitment measures (being married/cohabitating, the number of children and having small children in the household) do not explain the difference in wage between employees working for a male or female immediate manager.

Work tasks?

Another bias we address comes from the possibility of an unmeasured selection of employees or managers into work tasks that are differently rewarded. To explore work-task assignment, we exploit the following questions: “non-managerial work with people,” (ii) “emotionally demanding work,” (iii) “managerial work,” (iv) “work with text/numbers,” (v) “manual work”.

The analyses show that work tasks are indeed being differently rewarded. Apart from work that is emotionally demanding, wages are higher for employees who work with managerial tasks, texts and numbers, while wages are lower for employees who either work with people or do manual work.

Moreover, and importantly, accounting for female managers being overrepresented among those managing low-paid tasks, the point estimate for having a female immediate manager at the highest level changes and becomes positive, although not statistically significant. The point estimate for working for a lower-level manager is robust to the inclusion of work task, but decreases slightly.

Gender composition of the establishment?

A final bias we address is the influence of gender composition of the employees in the establishment. If, compared to male immediate managers, female immediate managers are more often situated in female-dominated establishments, wages would be lower if female-dominated establishments either are less profitable on average or more often are low-wage firms.

The larger the share of women in the establishment, the lower the mean wage. Nevertheless, our results indicate that the negative association between having a female manager is robust to accounting for the female domination of an establishment at the middle-management level. Like with work tasks, the point estimate for having a female immediate manager at the highest level of management changes and becomes positive when we account for female managers in this position being overrepresented in establishments with a large share of women.  

Take Aways

We find that the association between the gender of the immediate manager and wages of female employees is heterogeneous, which is also the case when we account for all differences by gender of the manager and manager position jointly. The difference between the coefficients of high- and mid-level managers in these models is also statistically significantly different.

By accounting for manager position we show that the negative association was driven solely by immediate manager-employee relations at the lower level of establishment management and not at the higher levels – thus presumably capturing a difference in manager influence on employee outcomes. This highlights the importance of assessing this association by organizational level.

Read more

Karin, Halldén, Jenny Säve-Söderbergh, and Åsa Rosén,Gender of the immediate manager and women’s wages: The importance of managerial position,” in Social Science Research 2018.

Image: Pixabay

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