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

Jakob Alfitian (), Marvin Deversi () and Dirk Sliwka ()
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Jakob Alfitian: University of Cologne, Faculty of Management, Economics, and Social Sciences. Albertus Magnus Platz, D-50923 Köln, Germany
Marvin Deversi: Education Y
Dirk Sliwka: University of Cologne, CESifo and IZA, Faculty of Management, Economics, and Social Sciences, Albertus Magnus Platz, D-50923 Köln, Germany

No 244, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

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-neutral 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 managers discretion in allocating the budget, can completely eliminate the gender gap in salary increases. The treatments also do not appear to undermine 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, preventing the widening of gender gaps throughout the career.

Keywords: Randomized Controlled Trial; Pay equity; Gender pay gap; Salary structure (search for similar items in EconPapers)
JEL-codes: J31 J71 M52 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2023-07
New Economics Papers: this item is included in nep-exp, nep-gen, nep-hrm and nep-lma
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