Mind the gap: an empirical analysis of pay discrimination in Hollywood

Abstract

Purpose This study aims to identify and explain a possible gender pay gap in the creative industry. By using the salary information of Hollywood actors, this paper restricts the analysis to a relatively homogenous group of workers. In addition, actors' human capital endowments and past performance can be measured precisely. The factors that impact the salaries of movie stars are likely to influence the pay of other high-wage employees, such as athletes and executives. Design/methodology/approach This paper uses a rich panel data set including 178 female and male actors in 973 movies released between 1980 and 2019. Using a random-effects model and the Blinder–Oaxaca decomposition approach, this paper distinguishes between a fraction of the gender pay gap that can be explained and another fraction that cannot be explained. Hence, only the unexplained residual typically obtained by estimating two standard Mincer-type earnings functions is due to discriminatory pay practices. Findings This study reveals a pay difference between female and male actors. Gender-specific representation in leading roles and systematic differences in performance measures can explain this pay difference. While female actors' underrepresentation in leading roles reflects consumer tastes and, therefore, reflects discriminatory attitudes, no evidence can be found for direct pay discrimination in Hollywood's movie business. Originality/value To the best of the authors’ knowledge, this is the first Hollywood study to relying on a rich panel data set that includes various measures of the human capital characteristics of the different individual actors. This paper's theoretical contribution lies in applying classic labor economics reasoning to explain pay determination in Hollywood's movie business.