The Old Boys' Club: Schmoozing and the Gender Pay Gap
By means of a natural experiment in a large financial institution we explore the
hypothesis embodied by the term "Old Boys’ Club" - that male employees are promoted
faster than female employees due to favorable treatment by their male managers.
We exploit the rotation of managers in a large financial institution, and use an event
study analysis to estimate the causal effect of the manager’s gender on the employee’s
outcomes. We show that male employees are promoted faster under male managers
than under female managers. These promotion differences are not accompanied by any
differences in effort or output. These manager effects are significant in magnitude, and
can explain a third of the unconditional gender pay gap in this organization. Moreover,
we provide suggestive evidence that these managers effects are due to increased socialization
with managers. For example, we show that these manager effects are present
only if the manager and employee work in close proximity. We show that male managers
spend more of their breaks with male employees. And we show that, even within male
employees, a non-gender shock to socialization affects promotions in a similar manner.
Citation:
Cullen, Zoë B., and Ricardo Perez-Truglia. "The Old Boys' Club: Schmoozing and the Gender Pay Gap." Working Paper, October 2019. View Details