Earnings Gender Gap in Business

PARIS — The worlds of finance and big business are notoriously dominated by middle-aged men. But recent research suggests that this may not be for the usually suspected reason — a glass ceiling molded from male prejudice. The research, by Marianne Bertrand, a professor of economics at the University of Chicago Booth School of Business, and two Harvard economics professors, Claudia Goldin and Lawrence F. Katz, provides a statistical explanation: women with children fall behind because they work less, the study says.

The joint paper, “Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors,” tracks the careers of male and female graduates of the Chicago business school who received their master’s degree in business administration between 1990 and 2006. It follows their progression into the corporate and financial sectors and shows how career paths differ by gender in terms of earnings and labor force participation, several years after graduation.

“Despite the narrowing of the gender gap in business education, there is a growing sense that women are not getting ahead fast enough in the corporate world,” the report says. Indeed, while 40 percent of master’s degrees in business awarded in the United States are earned by women, the survey cites research from the 1990s that showed only 2.5 percent of senior executives in large and medium-size U.S. companies were women. While the number of women chief executives in those companies rose eight-fold between 1992 and 2004, they still numbered only 34, or 1.3 percent of the total.

“The main conclusion from our work is that female M.B.A.’s have not done as well as male M.B.A.’s in the labor market,” the report says. “That finding should not come as a surprise. The more startling findings concern why they have not done as well.”

In business school and early employment, male and female career paths are quite similar, the survey shows. Women tend to take more marketing classes and men more finance classes; but their grade point averages differ only very slightly, and the years following graduation generally lead to similar jobs and performance.

The real difference, said Dr. Bertrand in an interview, starts with maternity leave. “Any departure, for six months or more, is costly,” she said. “Male or female, you never re-enter where you were.”

Women executives who do not have children follow career paths that closely replicate those of their male peers. Successful M.B.A. couples have similar work patterns, said Dr. Bertrand. “Women without children married to high-earning spouses are just as likely to work and accumulate post-M.B.A. work experience at an almost identical rate,” she said. “Call a woman without a child a man.”

Until the first child arrives, M.B.A. couples act as mutual drivers, encouraging each other to work more, Dr. Bertrand said. But with the arrival of motherhood, the picture changes. When women executives return to the office, after several months of absence, they typically start to work shorter hours, the study shows: 52 hours per week, compared with an average 58 hours for their male peers, as they adapt to their new double task. “They try to have both pieces,” Dr. Bertrand said.

About a decade after completion of the M.B.A. course, the gap in hours worked adds up to the cumulative equivalent of a six-month difference in job experience between men and women, and the difference is a costly one, the report says.

The relative earnings of female executives start to decline in the first two years after the first child is born, and the rate of decline accelerates thereafter. “Earnings decline linearly with hours worked in the first two years after the first birth, but hourly wage penalties, associated with career interruptions, become evident for M.B.A. women three years after the birth.

“A woman’s annual earnings drop by about $45,000 in the two years following the first birth, and the impact grows close to $80,000 a year in subsequent years.” In contrast, the earnings of male M.B.A.’s continue to rise after they become fathers. “Male labor supply is virtually unaffected by fatherhood,” the report notes.

Because top executive jobs are hard to fit with motherhood, high-flying women may quit the corporate rat race for self-employed consulting, and then cut back even further on working time: 10 years after completing an M.B.A., 62 percent of self-employed women in the survey sample had made that decision. “They want to be excellent professionally, but they want to be excellent mothers, too,” Dr. Bertrand said.

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