Gender Gaps in Pay and Advancement within Firms: Evidence from Ethiopia’s Financial Sector

Ketki Sheth, Toni Johannes Weis and Saba Yifredew Getnet

No 11436, Policy Research Working Paper Series from The World Bank

Abstract: Gender gaps in pay and leadership roles are well documented across labor markets. However, the literature on low- and middle-income countries is limited, and it remains unclear whether these gaps reflect sorting into lucrative, high-skill sectors or differential career progression within those sectors. This paper examines gender differences in compensation, advancement, and career-relevant mechanisms within such a high-skill sector, focusing on finance in Ethiopia and using evidence from the country’s largest commercial bank, the Commercial Bank of Ethiopia, which is estimated to account for roughly one-quarter of employment in the country’s finance sector. Using six years of administrative records covering the universe of nearly 50,000 employees, combined with large-scale employee and manager surveys, the paper documents substantial gender gaps in compensation and career advancement: women earn approximately 85 percent as much as men, are 80 percent less likely to hold supervisory roles, and are 68 percent less likely to hold managerial roles. These gaps are not explained by differences in education, experience, or internal performance evaluations. The study finds little support for commonly cited mechanisms emphasized in high-income settings, including gender differences in willingness to compete for promotions, negotiate, or access professional netwo rks. Instead, gender differences emerge in access to career-enhancing opportunities and in constraints on work flexibility. Together, these findings suggest that gender gaps in advancement arise not from lower ambition or weaker effort but from differences in exposure to advancement-relevant opportunities and in time allocation and geographic mobility, some of which may be amplified through supervisors’ perceptions. The bank under study performs relatively well on aggregate gender indicators and has explicitly prioritized women’s advancement, suggesting that these estimates are likely lower bounds on gender gaps elsewhere in the financial sector and that substantial disparities can persist even in comparatively favorable institutional settings.

Date: 2026-08-06
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