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The Old Boy Network: Gender Differences in the Impact of Social Networks on Remuneration in Top Executive Jobs

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  • Seabright, Paul
  • Lalanne, Marie
Abstract
Using an original dataset describing the career history of some 16,000 senior executives and members of the non-executive board of US, UK, French and German companies, we investigate gender differences in the use of social networks and their impact on earnings. There is a large gender wage gap: women (who make up 8.8% of our sample) earned average salaries of $168,000 in 2008, only 70% of the average $241,000 earned by men. This is not due to differences in age, experience or education levels. Women are more likely than men to be non-executives, whose salaries are lower; nevertheless, a substantial gender gap still exists among executives. We construct measures of the number of currently influential people each individual has encountered previously in his or her career. We find that executive men's salaries are an increasing function of the number of such individuals they have encountered in the past while women's are not. Controlling for this discrepancy, there is no longer a significant gender gap among executives. These findings are robust to the use of different years, to the use of salaried versus non-salaried remuneration, and to the use of panel estimation to control rigorously for unobserved individual heterogeneity. In contrast to executives, the salaries of non-executive board members do not display a significant gender wage gap, nor any gender difference in the effectiveness with which men and women leverage their links into salaries. This suggests that adoption of gender quotas for board membership, as has been enacted or proposed recently in several European countries, is unlikely to reduce the gender gap in earnings so long as such quotas do not distinguish between executive and non-executive board members.

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  • Seabright, Paul & Lalanne, Marie, 2011. "The Old Boy Network: Gender Differences in the Impact of Social Networks on Remuneration in Top Executive Jobs," CEPR Discussion Papers 8623, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8623
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    Cited by:

    1. Alessandra Colombelli & Elena Grinza & Valentina Meliciani & Mariacristina Rossi, 2021. "Pulling Effects in Immigrant Entrepreneurship: Does Gender Matter?," Economic Geography, Taylor & Francis Journals, vol. 97(1), pages 1-33, January.
    2. Seabright, Paul & Berardi, Nicoletta, 2011. "Professional Network and Career Coevolution," CEPR Discussion Papers 8632, C.E.P.R. Discussion Papers.
    3. Liqui Lung, C. W., 2022. "Optimal Self-Screening and the Persistence of Identity-Driven Choices," Cambridge Working Papers in Economics 2274, Faculty of Economics, University of Cambridge.
    4. Magnan, Nicholas & Spielman, David J. & Gulati, Kajal & Lybbert, Travis, 2015. "Information Networks among Women and Men and the Demand for an Agricultural Technology in India," 2015 Conference, August 9-14, 2015, Milan, Italy 212209, International Association of Agricultural Economists.
    5. Javakhadze, David & Shelton, Austin, 2022. "Executive social connections and gender pay gaps," Journal of Corporate Finance, Elsevier, vol. 73(C).
    6. Friederike Mengel & Jan Sauermann & Ulf Zölitz, 2019. "Gender Bias in Teaching Evaluations," Journal of the European Economic Association, European Economic Association, vol. 17(2), pages 535-566.
    7. Ilse Lindenlaub & Anja Prummer, 2014. "Gender, Social Networks And Performance," Cambridge Working Papers in Economics 1461, Faculty of Economics, University of Cambridge.
    8. Estrin, Saul & Stephan, Ute & Vujić, Sunčica, 2014. "Do women earn less even as social entrepreneurs?," LSE Research Online Documents on Economics 60606, London School of Economics and Political Science, LSE Library.
    9. Mitri Kitti & Matti Pihlava & Hannu Salonen, 2016. "Search in Networks: The Case of Board Interlocks," Discussion Papers 116, Aboa Centre for Economics.
    10. Lalanne, Marie & Seabright, Paul, 2016. "The old boy network: The impact of professional networks on remuneration in top executive jobs," SAFE Working Paper Series 123, Leibniz Institute for Financial Research SAFE.
    11. Thomas Bourveau & Renaud Coulomb & Marc Sangnier, 2021. "Political Connections and White-Collar Crime: Evidence from Insider Trading in France," Journal of the European Economic Association, European Economic Association, vol. 19(5), pages 2543-2576.
    12. Ann L. Owen & Judit Temesvary & Andrew Wei, 2021. "Gender and Professional Networks on Bank Boards," Finance and Economics Discussion Series 2021-021r1, Board of Governors of the Federal Reserve System (U.S.), revised 23 Aug 2021.
    13. Chika O. Okafor, 2020. "Social Networks as a Mechanism for Discrimination," Papers 2006.15988, arXiv.org, revised Feb 2022.
    14. Beaman, Lori & Dillon, Andrew, 2018. "Diffusion of agricultural information within social networks: Evidence on gender inequalities from Mali," Journal of Development Economics, Elsevier, vol. 133(C), pages 147-161.
    15. Liqui Lung, C. W., 2022. "Optimal Self-Screening and the Persistence of Identity-Driven Choices," Janeway Institute Working Papers 2232, Faculty of Economics, University of Cambridge.
    16. Ilse Lindenlaub & Anja Prummer, 2014. "Gender, Social Networks And Performance," Cambridge Working Papers in Economics 1461, Faculty of Economics, University of Cambridge.
    17. Iñaki R Longarela, 2017. "Explaining vertical gender segregation: a research agenda," Work, Employment & Society, British Sociological Association, vol. 31(5), pages 861-871, October.
    18. Amany Gouda-Vossos & Barnaby J Dixson & Robert C Brooks, 2016. "Sexual Conflict and Gender Gap Effects: Associations between Social Context and Sex on Rated Attractiveness and Economic Status," PLOS ONE, Public Library of Science, vol. 11(1), pages 1-14, January.

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    More about this item

    Keywords

    Executive compensation; Gender wage gap; Social Networks;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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