The Old Boys' Club: Schmoozing and the Gender Pay Gap

Zoë B. Cullen; Ricardo  Perez-Truglia

Working Paper | 2019

The Old Boys' Club: Schmoozing and the Gender Pay Gap

by Zoë B. Cullen and Ricardo Perez-Truglia

Abstract

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 manager 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.

Keywords: pay gap; schmoozing; promotion; Gender; Personal Development and Career; Wages;

Language: English

Format: Print

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Citation:

Cullen, Zoë B., and Ricardo Perez-Truglia. "The Old Boys' Club: Schmoozing and the Gender Pay Gap." Working Paper, October 2019.

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The Old Boys' Club: Schmoozing and the Gender Pay Gap

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