female leadership increases companies’ performance, reduces gender inequality, Macis writes
In a new paper for IZA World of Labor, by Carey Business School Associate Professor Mario Macis examines the reasons for the persistence of wage and leadership gender gaps and their causes and consequences. It emphasizes the beneficial role of female leaders in reducing gender inequality.
Gender wage gaps and women’s underrepresentation in leadership positions exist at remarkably similar magnitudes across countries at all levels of income per capita. Macis summarizes recent research showing that although women in many developed countries have reached parity with men in terms of formal educational attainment and employment, earning disparities between the genders are actually greater in richer countries.
More specifically, women’s earnings are 80 percent of men’s in countries with GDP per capita below $10,000; 82 percent in countries with GDP per capita between $10,000 and $30,000; and 76 percent in countries with GDP per capita above $30,000.
Women also remain underrepresented in leadership positions in institutions and organizations. Women hold only about 20 percent of parliamentary seats worldwide, and a survey of 100,000 private firms in 126 countries found only 29 percent of top managers to be women.
Research on the causes and consequences of gender gaps in leadership positions in organizations has grown in recent years. Studies found a positive correlation between female leadership and firm performance, so this disparity reflects an inefficient allocation of talent, with negative consequences for growth. Moreover, interactions between female leaders and other women in firms were shown to contribute to greater gender equality and to have a positive effect on female promotion in the lower ranks.
Policy interventions aimed at reducing gender disparities in education and labor market participation are important particularly in developing countries. But further policy action is needed as factors such as education, occupation, and industry explain only part of the gender gaps. Macis shows that other factors are at play, including gender differences in psychological traits, socio-cultural norms and dynamics and discrimination.