This project examines the impact of the corporate board gender composition on pay-related outcomes within UK companies with at least 250 employees. Outcomes of interest are: wages for men and women, the company-reported gender pay gap (GPG), worker representation and interest in the mandatory GPG reporting. This project also investigates how these effects vary across companies with different levels of productivity.
This study contributes to the empirical literature on the importance of female directors in favour of other female employees. Our analysis shows that female directors act as a signal: they indicate if an employer is genuinely vested in compensating their teams equitably. Female directors are a positive work-culture element towards equal opportunities that shift norms and may affect worker preferences.
Appointing more female directors in corporate boards is associated with a reduction in the gender pay gap by more than 3%. How?
The positive effect of board gender diversity on reducing the GPG is more pronounced in firms with higher productivity. Why?
Our study also finds that the influence of female directors on reducing gender pay discrepancies is more pronounced in firms where the majority of the board members come from the UK, highlighting the role of local cultural dynamics.
Increasing female representation within companies, offering promotion opportunities to senior positions, and increasing female directors are tools to decrease GPG. This is important in male-dominated sectors in which women have fewer opportunities.