Women MBAs are still outearned by men. But why?
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The pay gap between high-earning millennial and Gen Z men and women is shrinking compared with earlier generations. That's the good news.
Why it matters: Women are doing it by working longer hours and staying in the workforce, rather than taking timeouts for child care, a new working paper published in the National Bureau of Economic Research finds.
The bad news? Women MBAs earn less than their male peers as soon as they enter the workforce, and the researchers can't definitively say why.
By the numbers: Women with children who earned an MBA in 2006 or after were 60% less likely to leave the workforce than older women were, per the research released earlier this month from three scholars at the University of California Berkeley.
- 13 years out of school, the older generation of women, on average, earned less than $300,000 a year. Men earned over $400,000. (If you take stock options and other equity grants into account, the gap gets even wider.)
- For the younger folks, at the 13-year point, the difference is just $34,000.
The big picture: The paper is an update on landmark research, coauthored by Nobel Prize winning economist Claudia Goldin, who looked at pay among MBAs who graduated from the University of Chicago from 1990 to 2006.
- That paper found there isn't a pay gap at the start of a woman's career. Men and women earned basically the same amount. The pay disparity starts revving up over time, as more women see their careers interrupted by motherhood or reduced their hours to deal with child care.
Where it stands: The Berkeley researchers ran the study again. They surveyed graduates of an unnamed public business school over 30 years, splitting them into pre-2006 and post-2006 groups.
- Not only were the younger women working more, but the paper also found the men were working slightly less.
The intrigue: The researchers controlled for all manner of things to explain the pay difference. They looked at what industries women and men choose, grades and test scores, child care availability and hours worked. Still, that gender gap remained at the start.
- "I would just call it gender bias," says Noor Sethi, a PhD candidate at Berkeley who did the research with Ann Harrison, former dean of the Haas School of Business at Berkeley, and Laura Kray, a professor who studies gender in the workplace.
- "The only reason women are being paid less, beyond some threshold, is because they are women."
Reality check: It's possibly also due to the limitations of the study, she says. They tested a finite number of hypotheses, so perhaps they missed one.
- Plus, the research was conducted by surveying graduates, not with hard salary data. Memories can be fuzzy.
What to watch: The paper doesn't cover the current period, when remote work has enabled parents to work even more flexibly.
