The Effect of the External Labor Market on the Gender Pay Gap among Executives

Abstract

To date, few empirical studies have explored potential differences in the effects of external labor market hiring on the compensation of male and female managers. Using longitudinal data from a sample of public high-technology firms on individual top executives’ total compensation in the United States, and the separate components of base and variable pay, the authors study the effects of being an external hire for men and women. The results suggest that women who are external labor market hires are disadvantaged, in both base and variable compensation, compared with internal placements. The analyses also provide some evidence that having greater representation of women in top positions reduces the disadvantaging effects for women of being an external hire.