This study aims to analyse the gender pay gap among CEOs, VPs and potential top executives. The authors seek to analyse how much of the gap is explained by differences in individual characteristics and how much is explained by firm characteristics and discriminatory processes.
The paper estimates compensation functions based on a panel of employer‐employee data set covering all Danish companies in the private sector with more than 50 employees during the period 1996‐2005.
The authors document that when controlling for a large number of observable characteristics and time‐invariant characteristics, there still exists a large gender compensation gap among top executives in Denmark. For VP and potential top executives, the estimated gap increased during the period 1996‐2005 while for the small and selected group of CEOs, the corrected gender gap decreased slightly.
The study does not claim to identify causal links between top executive compensation and individual or firm specific background characteristics.
The extension of the family‐friendly schemes may have had negative boomerang effects on the compensation and careers of all women, irrespective of whether they become mothers or not. Especially for those women aiming to reach the top of the organisation, these effects may be important because potential career interruptions are expected to be more severe for this group.
This study adds to the limited empirical literature on the gender pay gap among the narrow group of top executives using a large panel employer‐employee data set of all Danish companies.
