Balanced Boards, Balanced Wages: When Female Directors Shrink the Gender Wage Gaps

61 Pages Posted: 9 Jun 2022 Last revised: 12 Mar 2024

Date Written: November 1, 2023

Abstract

Gender board quotas have emerged as a policy of choice to tackle workplace gender inequalities in many countries. Introduced in 2010, the French quota requires a 40% female representation on boards of both publicly listed and large private companies by 2017. To examine its impact, we first construct and analyze a dataset on the board composition of all French firms from 2008 to 2021. Over this period, the average female board share rose from 11% to 42% for targeted listed firms, but only from 14% to 30% among targeted non-listed firms. Given the partial compliance observed, we use difference-in-differences and IV strategies using the firms listed in 2009 as a treatment group. We show that a higher female board share results in a greater likelihood of having a female CEO as well as increases in the share of women among top executives and top earners. It also leads to a significant reduction in gender wage gaps at all levels of the firm's hierarchy. These improvements in gender equality outcomes come mainly through external hires for top positions while wage gap reductions benefit both new and incumbent employees. Our analysis further identifies factors contributing to the policy's effectiveness. Post-quota female appointees are found to be more qualified than pre-quota and to gain access to key board committees. As the female board share increases, the CEO remuneration becomes also more likely to be tied to gender equity goals. These results underscore that gender quotas can help advance gender equality in the workplace.

Keywords: Gender wage gap, Corporate governance, Discrimination

JEL Classification: J1, J3, J7, M3, G3

Suggested Citation

Ladant, François-Xavier and Paul-Delvaux, Louise, Balanced Boards, Balanced Wages: When Female Directors Shrink the Gender Wage Gaps (November 1, 2023). Available at SSRN: https://ssrn.com/abstract=4125143 or http://dx.doi.org/10.2139/ssrn.4125143

François-Xavier Ladant (Contact Author)

Harvard University ( email )

Cambridge, MA
United States

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Louise Paul-Delvaux

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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