Not Just a Formality: Pay System Formalization and Sex-Related Earnings Effects

Abstract

Drawing on neoclassical economic, internal labor market, and devaluation theories, we examine how the sex composition of jobs and the sex of individual workers affect earnings, depending upon the formalization of the pay type. Using personnel data for over 8,000 employees, we confirm the existence of a negative relationship between earnings and the proportion female in a job. We also find that for less-formalized pay types (cash incentive bonuses), sex-composition and individual-sex effects are larger than for more formalized pay (merit raises and base salary). Together, these findings support devaluation explanations, suggest that incentive bonuses may widen the earnings gap between women and men, and have implications for the design of pay structures in organizations.

Agents of Change or Cogs in the Machine? Reexamining the Influence of Female Managers on the Gender Wage Gap

“…Based on their knowledge of and experience working in other firms, our interviewees believed that this performance management and compensation process was typical of that in place in many large corporations. It was also very similar to the processes in place in other settings from which personnel records have been drawn in prior research (e.g., Elvira and Graham 2002;Castilla 2008;Castilla 2011).…”

“…1 Against the backdrop of extensive research on how organizational practices affect gender inequality in the workplace (Baron, Davis-Blake, and Bielby 1986;Elvira and Graham 2002;Kalev, Dobbin, and Kelly 2006;Kalev 2009), a growing body of work has drawn attention to the role of managers in perpetuating or ameliorating inequality Briscoe and Kellogg 2011;Castilla 2011). 2 In light of the inroads that women made into the management ranks of organizations during the 1970s and 1980s and subsequent evidence that this progress began to stall out in the 1990s (Cohen, Huffman, and Knauer 2009), a prominent stream of work (Jacobs 1992;Shenhav and Haberfeld 1992;Hultin and Szulkin 1999;Cohen and Huffman 2007;Penner, Toro-Tulla, and Huffman 2012) has examined the question:…”

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“…45 . 46 Krieger, 1995;Reskin, 2000. 47 Elvira and Graham, 2002. 48 Stainback, Tomaskovic-Devey, and Skaggs, 2010. 49 Burk and Espinoza, 2012. 50 Irwin Sandler, Sharlene A. Wolchik, Gracelyn Cruden, Nicole E. Mahrer, Soyeon Ahn, Ahnalee Brincks, and C. Hendricks Brown, "Overview of Meta-Analyses of the Prevention of Mental Health, Substance Use, and Conduct Problems," Annual Review of Clinical Psychology, Vol. 10, 2014, pp.…”