Mind the (Gender Pay) Gap: Firm productivity and board gender composition

Abstract

This paper explores the role of firm productivity and board gender composition on the Gender Pay Gap in the UK. The analysis combines different sources of UK firm-level administrative data for employers with at least 250 employees since 2017/18. Results show that more productive firms tend to report higher Gender Pay Gap. This is because women are relatively under-represented at the top of the pay distribution. Even when they get a senior position, women face within-firm inequalities and earn less than men. Finally, a more gender diverse board can decrease the pay gap since female directors are associated with better pay of female employees by more than 4%. This evidence is more prominent for companies (a) with less than 5,000 employees; and, (b) whose directors own shares.