What Sweden Can Teach Us About Equal Opportunity and Gender Gaps

A new study confirms that, although female executives are as equally skilled as their male counterparts, they don’t have equal opportunities to reach the top in the executive labor market or get equal pay. It also looks at what causes these gender gaps.

Being a female in a male-dominated business world is tough. According to research group Catalyst, even though women account for 45 percent of the workforce in S&P 500 companies, only 25 percent of them reach executive and senior level positions, and merely 4 percent hold CEO roles.

In Australia, Bankwest Curtin Economics Centre and the Workplace Gender Equality Agency (WGEA) have released a report showing that amongst top-tier managers in Australian organizations, women are paid on average $100,000 per year less than men, discrimination being one of the many contributing factors to gender pay gaps. According to WGEA Director Libby Lyons, who urges employers to address gender pay gaps, the report shows that “all industries, including female-dominated industries, have work ahead of them to improve gender pay equity.”  

A recent working paper goes much further in scope, and looks at gender gaps among Swedish male and female corporate executives, showing a gap of 18 percent in CEO appointments and 27 percent in pay.

The study called “Equal Opportunity? Gender Gaps in CEO Appointments and Executive Pay” is written by Matti Keloharju, visiting scholar at Harvard Business School; Samuli Knüpfer, finance professor at BI Norwegian Business School; and Joacim Tåg, program director at the Research Institute of Industrial Economics.

Known as one of the most democratic countries in the world, Sweden has the fourth-largest female representation on corporate boards, and the fifth-largest female representation in the parliament.

Although this is not the first research to show that female executives are underrepresented in the corporations’ top-tier, it is unique by having access to an exceptionally large set of corporate executives and their characteristics. These characteristics vary considerably, with female executives having a higher level of education and a business degree, including work experience in a larger number of companies, as well as consulting and investment banking experience.

However, they are less likely to be married, interrupted their career more often despite having fewer children than men, have less labor market experience, and lower risk tolerance in playing the stock market.

Keloharju and his team collected data about virtually every individual in a Swedish company, who has already reached the top-tier, either as a CEO or as another top executive between 2004 and 2010. The authors highlight the differences between their research and previous ones, telling it uses “exceptionally rich” Sweden data sourced from Statistics Sweden, The Swedish Company Registration Office, and Military Archives. They excluded family run businesses to rule out cases where the CEO was a descendant of the founder.

Three aspects of the research make it unique. It looks at a more thorough set of individual-level characteristics combined with a large set of firm-level attributes; has a broader scope, exploring both top executives’ appointments and pay; and avoids using gender-related outcomes as explanatory variables.

The researchers explain that the elements that account for gender gaps come from gender differences in personal characteristics and choices (like educational background and career aspirations), as well as discrimination women experience, and believe their results could be applicable to other countries as well.

While 21 percent of senior executives in Sweden are women, only 8 percent of them are in a CEO position. Male executives earn, on average, 27 percent more than female executives, with a slighter pay gap at the top level, where female CEOs earn 7.1 percent less than male CEOs.

The authors write: “Our results are consistent with the view that male and female executives sharing equal attributes neither have equal opportunities to reach the top nor are they equally paid.”

So, is equal opportunity a lost cause for women? Or are there ways to change things for the better?

“One method that could empower women would be to increase transparency by means of simple statistics,” Professor Keloharju says. ”If firms had to disclose statistics on the gender gap in pay and make that information easily available, female employees and job applicants would find it easier to assess the gender equity in a firm and they could either avoid firms with large gaps or use the gap as a negotiation argument. Already now, pay is very transparent in Finland, but well-prepared statistics would make it easier to see the big picture.”

“In the United States, the Equal Employment Opportunity Commission is in the process of making transparency the default: Under an executive order issued by President Obama earlier this year, the government agency could begin collecting pay gap data on the nation’s biggest employers as early as this fall and publish aggregate results in 2017.”


Sources & read more:

Working Paper: “Equal Opportunity? Gender Gaps in CEO Appointments and Executive Pay” by Matti Keloharju, Samuli Knüpfer, and Joacim Tåg

Report: “Gender Equity Insights 2016: Inside Australia’s Gender Pay Gap” by Rebecca Cassells

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