Want to reduce the gender wage gap? Appoint more female managers.

Study finds that a higher proportion of women managers in a workplace would reduce the disparity in wages with men, especially if they are given authority to set pay.

In much of the developed world, women now achieve higher educational attainment than men, and are also closing the gap in labour market experience. Despite this, a gender wage gap persists, with women earning substantially less than men. The gap has been closing but slowly.

A study, co-written by Dr John Forth, Reader in Human Resources Management at Bayes Business School, with Dr Nikolaos Theodoropoulos and Professor Alex Bryson, finds a robust association between the share of female managers in a workplace and the size of the gender wage gap therein. In essence, a stronger presence of women in managerial positions can help shrink the gap.

For Are women doing it for themselves? Female managers and the gender wage gap, which has been published in Oxford Bulletin of Economics and Statistics, the authors analysed linked employer-employee data for Britain, taken from the 2004 and 2011 Workplace Employment Relations Surveys (WERS) to determine the size and nature of the gender wage gap.

They hypothesised that female managers would influence the size of the gap when workplace managers had autonomy from head office in setting pay at the workplace, and when workplace managers presided over discretionary, performance-related payments. The authors suggest that women may be more successful in arguing their case for pay rises if female managers are more capable or willing than male managers of recognising their contribution.

They found that the association between the share of female managers and the gender wage gap is more pronounced when these two mechanisms are present. Women managers shift the distribution of rewards in favour of female subordinates to such an extent that, the gap is effectively eradicated when more than 60% of a workplace’s managers are women.

The gap closes because women’s wages are positively associated with the share of female managers, while men’s wages are negatively associated with it. If women are well-represented at management level, managerial decision-making may have greater consideration for the interests of women, challenging discrimination (against women), and introducing policies that enable women to compete on a level playing field.

A greater proportion of women in managerial positions may also affect gender norms at the workplace, and thus the jobs available to them, the wage they can command, and the extent to which the workplace can accommodate their job preferences (such as work flexibility).

One way to encourage the appointment of more women to managerial roles could be to compel companies to report the gender composition of their management staff. Although gender wage gap reporting regulations were introduced in the UK in 2017, there is no compulsion for companies to publish figures on the gender composition of their management staff. If there was, the potential for embarrassment to a company’s reputation might encourage greater employment of women managers, and in turn help reduce the pay gap between men and women further.

The published version of the paper can be downloaded at City Research Online.