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« Back to Results

Top Income Inequality and the Gender Divide

Paper Session

Friday, Jan. 5, 2018 2:30 PM - 4:30 PM

Marriott Philadelphia Downtown, Grand Ballroom Salon B
Hosted By: American Economic Association
  • Chair: Claudia Goldin, Harvard University

Top Incomes and the Gender Divide

Anthony B. Atkinson
,
University of Oxford
Alessandra Casarico
,
Bocconi University
Sarah Voitchovsky
,
University of Melbourne

Abstract

In the recent research on top incomes, there has been little discussion of gender. How many of the top 1 and 10 per cent are women? A great deal is known about gender differentials in earnings, but how far does this carry over to the distribution of total incomes, bringing female employment and capital income into the picture? We investigate the gender divide at the top of the income distribution using tax record data for a sample of eight countries with individual taxation. We show that women are under-represented at the top of the distribution. They account for between a fifth and a third of those in the top 10 per cent. Higher up the income distribution, the proportion is lower, with women constituting between 14 and 22 per cent of the top 1 per cent. The presence of women in the top income groups has generally increased over time, but the rise becomes smaller at the very top. As a result, the gradient with income has become more marked: the under-representation of women today increases more sharply. Examination of the shape of the income distribution by fitting a Pareto distribution shows that at the end of the period women disappear faster than men as one moves up the income scale in all countries. In this sense, there appears to be something of a “glass ceiling” for women. In the case of Canada, Denmark, Norway and New Zealand, there appears to have been a reversal over time, with the slope of the upper tail having been steeper for women in the past. In seeking to explain this, we highlight the role of income composition, where we show that there have been significant changes over time, underlining the fact that it is not sufficient to look only at earned income.

The Glass Ceiling and the Paper Floor: Gender Differences Among Top Earners, 1981-2012

Fatih Guvenen
,
University of Minnesota
Greg Warren Kaplan
,
University of Chicago
Jae Song
,
Social Security Administration

Abstract

We analyze changes in the gender structure at the top of the earnings distribution in the United States over the last 30 years using a 10% sample of individual earnings histories from the Social Security Administration. Despite making large inroads, females still constitute a small proportion of the top percentiles: the glass ceiling, albeit a thinner one, remains. We measure the contribution of changes in labor force participation, changes in the persistence of top earnings, and changes in industry and age composition to the change in the gender composition of top earners. A large proportion of the increased share of females among top earners is accounted for by the mending of, what we refer to as, the paper floor - the phenomenon whereby female top earners were much more likely than male top earners to drop out of the top percentiles. We also provide new evidence at the top of the earnings distribution for both genders: the rising share of top earnings accruing to workers in the Finance and Insurance industry, the relative transitory status of top earners, the emergence of top earnings gender gaps over the life cycle, and gender differences among lifetime top earners.

Top Income Inequality and the Gender Pay Gap

Nicole M. Fortin
,
University of British Columbia
Brian Bell
,
King’s College London
Michael Boehm
,
Bonn University

Abstract

This paper explores the consequences of the under-representation of women in top jobs for the overall gender pay gap. Using administrative annual earnings data from Canada, Sweden, and the United Kingdom, it applies the approach used in the analysis of earnings inequality in top incomes, as well as reweighting techniques, to the analysis of the gender pay gap. We find that the gender earnings ratio in the bottom 90% of the earnings distribution is substantially more favorable, by 10 to 15 points than the overall ratio. Next, we construct counterfactual gender earnings ratios asking what would the gender earnings ratio be if women were represented among top earners as men are. In all three countries under study, that have experienced the largest increases in top income inequality after the United States, the under-representation of women in the top income groups (the top 0.1%, the next 0.9%, the next 9%) alone account for more than half of the gender gap in annual earnings. The analysis is supplemented by classic O-B decompositions of annual earnings from the LISA Swedish data and of hourly wages from the Canadian and U.K. Labour Force Surveys. There, we find that our measure of vertical segregation has overwhelming explanatory power, ranging from one-fifth to close to half of the gap, when compared to that of traditional factors, such as demographics, education, employment status, occupation, industry, and region of residence. Further recent increases in top incomes have led to substantial “swimming upstream” effects, accounting for differential progress in the gender pay gap over time. Finally, the results from country fixed-effects models comparing the “before” and “after” implementation of women’s quotas and disclosure rules in twenty treated countries by comparison with another twenty control countries indicate that these measures exert sizeable direct effects but little trickle-down effects.

Breaking the Glass Ceiling? The Effect of Board Quotas on Female Labor Market Outcomes in Norway

Marianne Bertrand
,
University of Chicago
Sandra E. Black
,
University of Texas-Austin
Sissel Jensen
,
Norwegian School of Economics
Adriana Lleras-Muney
,
University of California-Los Angeles

Abstract

In late 2003, Norway passed a law mandating 40 percent representation of each gender on the board of public limited liability companies. The primary objective of this reform was to increase the representation of women in top positions in the corporate sector and decrease the gender disparity in earnings within that sector. We document that the women appointed to these boards post-reform were observably more qualified than their female predecessors along many dimensions, and that the gender gap in earnings within boards fell substantially. On the other hand, we see no robust evidence that the reform benefited the larger set of women employed in the companies subject to the quota. Moreover, the reform had no clear impact on highly qualified women whose qualifications mirror those of board members but who were not appointed to boards. Finally, we find mixed support for the view that the reform affected the decisions of young women: while the reform was not accompanied by any change in female enrollment in business education programs, we do see some improvements in labor market outcomes for young women with graduate business degrees in their early career stages; however, we observe similar improvements for young women with graduate science degrees, suggesting this may not be due to the reform. Overall, seven years after the board quota policy fully came into effect, we conclude that it had very little discernible impact on women in business beyond its direct effect on the women who made it into boardrooms.
Discussant(s)
John Van Reenen
,
Massachusetts Institute of Technology
Andrea Weber
,
Central European University
Patrick Kline
,
University of California-Berkeley
Amalia Miller
,
University of Virginia
JEL Classifications
  • D3 - Distribution
  • J7 - Labor Discrimination