Shattering the Glass Ceiling: An Empirical Analysis of the Gender Gap in the Finance Industry

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Benton, Ariel Ivy
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We examine the relationship between the political affiliation of a state and the depth of the gender pay gap in executives across financial firms headquartered in those states, over the period 1992-2018. Although past literature has established the presence of a gender gap across executives in a range of corporations, as well as the financial services industry in particular in recent years, the literature has not attempted, to our knowledge, to find a relationship between state-level political stance and the gender gap in firms headquartered in those states. There is significant evidence in the literature of a growing "partisan schism" in the U.S. on issues concerning gender equality, with further evidence of the tendency for women to identify with the Democratic Party. Women have consistently supported the Democratic candidate over the Republican candidate in the last ten presidential elections. Most recently in 2016, 54% of women voted for the Democratic candidate, while 42% voted for the Republican. Thus, an analysis of the gender gap within the financial industry from a political stance presents a new and relevant angle to the discussion. We find that, as expected, males have higher total compensation - but these results are not consistent when political leanings are analyzed. Specifically, the salary gap is only identified in blue states, and is driven by the bonus received. Females seem to fare better in red states when compared to blue and mixed states.
Gender Gap, Glass Ceiling, Finance Industry