The gender pay gap in European executive boards: the role of executives’ pathway into the board

Abstract

We provide cross-country evidence on the gender pay gap on executive boards in large European companies and show that the pathway into the board – internal promotion versus external recruitment – matters for the size of the gap. We find evidence that among executives, women are paid less than men – especially when they were recruited from outside. Since for external candidates, gender stereotyping, and discrimination might be more pronounced than for internal candidates, our results support a power-and-discrimination-based view rather than a market-based view. Our empirical analysis is based on individual pay data for 359 executive board members in 75 firms in six countries (UK, France, Germany, Italy, Spain, and Switzerland) from 2011 to 2014. We find an unadjusted pay penalty for women of around 17% and an estimated adjusted gender pay gap of around 11%. The size of the adjusted gender pay gap crucially depends on the executives’ pathway into the board: Among the executives who were recruited from outside the firm, women receive an estimated 19% less than men. Our article suggests that the pathway into the board matters for women’s bargaining position and should be explored in future studies.