Is gender pay gap low in plants with more female managers evidence from small and medium entreprises of vietnam 2007

Interestingly, related to the solutions given by the researchers in order to reduce gender income differences, there was the relationship between female share in managers and gender wage

UNIVERSITY OF ECONOMICS, HO CHI MINH CITY VIET NAM – NETHERLANDS PROJECT FOR M.A PROGRAM IN

DEVELOPMENT ECONOMICS

IS GENDER PAY GAP LOW IN PLANTS WITH MORE

FEMALE MANAGERS? EVIDENCE FROM SMALL AND

MEDIUM ENTREPRISES OF VIETNAM 2007

-o0o -

A thesis submitted in partial fulfillment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

ABSTRACT

The goal of gender equality in income is not only an important matter

of human rights but also basic requirement for development of fair and

efficiency Therefore, study on the state of gender inequality in income has

the significant implications in moving toward the equality in society and

enhancing the efficiency of economic and social growth Actually, there have

been many previous studies related to the issues of gender income

difference, particularly the factors impact on reducing the gender gap in

earnings Inheriting these previous researches, my dissertation attempts to

investigate whether the gender gap in earnings is low in the establishments

with more female managers Using a sample size of 1043 employees and

2492 enterprises were surveyed in the Small and Medium Enterprises (SME)

in Vietnam in the year of 2007, matching employer and employee data and

distinguishing occupation the study ends up 345 job–cells In addition,

ordinary least squares modeling and ordinary least square with job-cell fixed

effects are applied to explore the effect on male – female income difference

of proportion of female manager Various explanatory variables for

characteristics of workers and plants are used as control variables Result

reveals that there is a negative relationship between the female share in

managers and gender pay gap, and the education has a significant statistic

and strong impact on the wage of the labors

Key words: Gender pay gap, matched employee – employer data

ACKNOWLEDGEMENTS

This thesis is completed with not only painful process but also enjoyable experience Fortunately, throughout the process I always got a lot of helps and supports from many people in order to make thesis possible On the same occasion, I would like to express my gratitude to all of them

Foremost, I would like to give my sincere gratitude and special appreciation to my academic supervisor Dr Pham Dinh Long, for his patience, motivation, enthusiasm, and immense knowledge His guidance helped me in all the time of research and writing of this thesis

Similarly, I sincerely thank to the Scientific Committee and staffs of Vietnam-Netherland Program for their willingness to provide information during the last time

Last but not the least, I would like to thank my family and classmate at VNP20 for their backing and helping so that I can complete this thesis

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 4

1.1 Problem statement 6

1.2 Research objective 8

1.3 Structure of research 9

CHAPTER 2: LITERATURE REVIEW 10

2.1 The definitions 10

2.1.1 Gender 10

2.1.2 Gender equality 10

2.1.3 Gender gap in earnings 11

2.2 Cause of gender wage gap and the factors impact on gender wage gap 12 2.2.1 Cause of gender wage gap 12

2.2.2 The factors impact on gender wage gap 16

2.2.2.1 Non-economic factor 16

2.2.2.2 Economic factors 16

2.2.2.2.1 Characteristics of employee 16

2.2.2.2.2 Education 17

2.2.2.2.3 Employment 17

2.2.2.2.4 Geographic factor 18

2.3 Measurement of gender pay gap 18

2.4 The impact on economic - social development of gender wage gap 19

2.5 The impact on male – female income difference of female manager 20

CHAPTER 3: OVERVIEW OF GENDER WAGE GAP IN VIETNAM 25

3.1 Overview the status of gender gap in earnings in Vietnam 25

3.2 The factors impact on male – female income difference 31

3.2.1 The age of employee 31

3.2.2 Education 32

3.2.3 Employment 32

3.3.4 Geography 32

CHAPTER 4: METHODOLOGY 34

4.1 The data 34

4.2 The variables 35

4.2.1 Education 35

4.2.2 Seniority 36

4.2.3 Age of employee 36

4.2.4 Size and Industry 36

4.3 The Econometrics Models and Results 37

CHAPTER 5: CONCLUSION, POLICY IMPLICATIONS AND LIMITATIONS 42

5.1 Conclusion 42

5.2 Policy implications 42

5.3 Limitations 43

REFERENCES 44 Bibliography Error! Bookmark not defined

LIST OF TABLES

Table1: Human development index and Human development index in

Southeast Asia Area 25

Table2: The share of women’s labor force participation 26

Table 3: The share of female in plants 27

Table 4: Summary statistics 38

Table 5: Wages and female shares in managers 38

Table 6: Wages regression 39

LIST OF APPENDICES Appendix 1: Correlation of variables 47

Appendix 2: Statistics variables 47

Appendix 3: OLS wage regression 48

Appendix 4: OLS wage regression with job – cell fixed effect 49

Appendix 5: Test for heteroskedasticity 49

Appendix 6: Test for multicollinearity 50

Appendix 7: The individual categories of ISIC 50

ABREVIATIONS

ILO International Labor Organization

VGCL The General Labor Confederation of Vietnam

SMEs Small and medium enterprises

DWC Division of Workers’ Compensation

CEDAW The Convention on the Elimination of all forms of Discrimination against women

OECD Organization for economic co-operation and development

STEM Science, Technology, Engineering and Mathematics

WB World Bank

GDP Gross domestic product

HLM Hierarchical linear modeling

OLS Ordinary least square

EEOC Equal employment opportunity commission

HDI Human Development Index

GDI Gender Development Index of Vietnam

UNDP United Nations Development Programme

WEF World Economic Forum

GSO The General Statistics Office of Vietnam

VHLSS Vietnam Household Living Standards Survey

In addition, economic growth will bring more effective for the reduction of poverty level in the country which has a higher level of gender equality Moreover, inequalities in income between women and men prevent the equal development and this makes the use of resources in society inefficient

In fact, the situation of gender inequality in earnings occurred in many countries, especially in the developing countries It might be said that the cause

of this condition primarily rooted traditional perspectives and preconceived ideas in the social about the male-supremacy in many countries Thereby, these lead to the restriction of opportunities for women to access the education and training, the choice of professions, an opportunity to improve professional qualifications The distribution of labor between men and women in different occupations, employment arrangements and job positions in the same business line is also obvious differences, which greatly affected on the difference in gender income Furthermore, women also have fewer opportunities to access

to these services as well as other basic resources such as water, transportation and marketing, capital, etc These things certainly impact on their improvement of the condition and economic status

In Vietnam, as reported by the International Labor Organization (ILO) on

7th March, 2013, the gap of income between men and women in Vietnam was continuously increasing while the proportion of women in work force was

higher than other countries in the world Approximately 72% of women participated in the labor force in Vietnam and this ratio was higher than that in most of other countries worldwide Nevertheless, Vietnam was one of the few countries where the gender wage gap was increasing in contrast with the trend

in most of other countries in the 2008-2011 period compared with the period 1999-2007 Moreover, according to the 2012-2013 Global Wages Report of the ILO, gender income gap of Vietnam increased by 2% in the recent period Statistical data of the General Department of Statistics in 2011 indicated that women's income was lower than men’s income, approximately 13% Also, the General Labor Confederation of Vietnam (VGCL) conducted a survey of employees’ salary in enterprises in 2012 This organization saw that wage of female workers was less, only 70-80% of their male colleagues Besides, Labor Survey Report published in 2012 stated the average monthly income of women was less than men’s in all economic sectors, state, non-state and foreign investment Even in occupations which primarily recruited focus on women such as health care, social work and sales, women still had a lower salary than male fellowship More specifically, the VGCL survey found that women often did the normal work whereas male undertook the management positions

Due to the important of this field, there were thus a lot of researches about gender pay gap conducted in the past indicating the determinants of difference in wage of women and men as well as providing solutions to reduce this gap such as Anderson, Tracy, et al (2001), Hultin and Szulkin (2003), Manning (2006), Blau and Lawrence (2007), Cohen and Huffman (2007), Becker (2010), Cardoso and Winter-Ebmer (2010), Spencer (2015) In Vietnam, studies about gender gap in earnings there are Liu (2002), Pham and Barry (2007) and so on Interestingly, related to the solutions given by the researchers in order to reduce gender income differences, there was the relationship between female share in managers and gender wage gap Particularly, in the research of Hultin and Szulkin (2003) namely “Mechanisms

of inequality unequal access to organizational power and the gender wage gap”, the authors used the multilevel models in order to analyze the dataset of Swedish which combined the information on a large number of private – sector enterprises and all their employees The finding showed that gender gap in income in plants were wider while there were more male representations among managers and supervisors in these enterprises and low relative wage of female worker in plants in which there were no or only a few women in managerial position Another notable research, Hirsch’s paper (2013) is one of these above studies, through the evidences from linked employer – employee data for Germany, Hirsch found that gender income difference decreased by 0.5 log point when increased the female share in first level management by 10% points Therefore, follows the cornerstones of Hirsch’s research and applies for the case of Vietnam in order to investigate the relationship of female share managers and gender pay gap, this study is conducted particularly in small and medium enterprises (SMEs) in Vietnam in the year of 2007

1.2 Research objective

The objective of the study is an analysis to find out whether or not the women have an important role in the case of reducing the gender income difference when they stand in the assembly line of managers in small and medium plants in Viet Nam

This research is also conducted to answer the main question that is gender pay gap low in plants with more female managers?

And for the scope of study, it is undertaken in SMEs in Vietnam in the year of 2007

1.3 Structure of research

The research is organized as follows In chapter one, problem statement and objective research are presented Chapter two provides concepts related to the literature review, the definitions and the causes as well as the factors impact on gender pay gap Chapter three presents the overview of gender gap

in Vietnam Chapter four presents data description, introduces methodology method used, gives the estimated results Finally, conclusion, policy suggestions and limitations are highlighted in the last - chapter five

CHAPTER 2: LITERATURE REVIEW

This chapter presents the overview of theory and discusses previous studies relates to the research The first part mentions about some definitions

of gender income difference The second part discusses about the causes of male – female income difference The third part briefly presents the measurement of gender gap in earnings The fourth part talks about the relationship of gender wage gap and social economic development And the last one indicates the impact on gender earning difference of female manager

Benefits of gender are the benefit of women and men that when applied they will change the actual division of labor by gender in the direction of progress, contribution to enhance gender equality

2.1.2 Gender equality

Follow the Convention on the Elimination of all forms of Discrimination against women (CEDAW) 1978, gender equality was the status (living conditions, living and working) in which women and men enjoyed the same

position, they had equal opportunities to access and use the resources to bring benefit for themselves, discovered and developed the potential of each gender

to devote to the development of each country and got benefit from this development

Therefore, gender inequality and the term "discrimination against women" means any distinction, exclusion or restriction based on gender which affect or aim to do harm or disable the woman authentication, beneficiaries or implementation of human rights and fundamental freedoms in the political, economic, social, cultural, civil and other fields on the basis of equality of men

and women no matter how their marital status like

2.1.3 Gender gap in earnings

In the field of labor, gender inequality presents in discrimination in access to opportunities, the discrimination in employment and occupation as well as discrimination in inheritance of employment achievements between male workers and female workers With a view to human-centered, gender inequality in income refers to the relationship of income distribution and gender As a result, the gender gap in earnings is discrimination in income of men and women workers, although they have the same feature of capabilities and labor productivity as well (Del Río, Coral, Carlos Gradín, and Olga Cantó, 2011)

Under the final report of Anderson, Forth, Metcalf and Kirby (2001) to Department for Education and Employment, there were a variety of theories explaining the male – female income difference Human capital theory explained the gender gap in earnings through the differences in the innate abilities of male and female or by differences in their education and experience, which translated into differences in their productivity Meanwhile, theories regarding the social construction of skills which was supposed the historically

inferior status of women may have led to the undervaluing of traditional female skills, and this created a value system that penalized both men and women for such skills Furthermore, according to the theory of dual labor market, there were two labor markets with differences in wages and conditions The primary labor market offered the high wages and good conditions in order to get higher level of productivity, whereas the secondary market had a lower level of pay and poor conditions to meet lower productivity Due to the restriction on women’s labor market options, they might be concentrated on seeking jobs in the secondary market And this would contribute to the gender pay gap

With the same findings, the organization for economic co-operation and development (OECD) has defined the gender pay gap is the difference between male and female earnings expressed as a percentage of male earnings

Another definition is of the European Commission has found gender pay gap as the average difference between men’s and women’s aggregate hourly earnings

In conclusion, a lot of papers have been conducted in the past and keep going to the presents, but they have same point of view on the definition of gender pay gap or the male – female difference in earnings

2.2 Cause of gender wage gap and the factors impact on gender wage gap

2.2.1 Cause of gender wage gap

According to Anderson et al (2001), the authors provided the theories such as “neo-classical labor market and theories incorporate a range of individual and institutional factors which could explain the existence of gender pay gap” Human capital theory stated that the innate ability and skill were dissimilar between women and men, this led to the productivity of women were less than men and might explain the gender pay gap Differences in choice

implied the women preferred the lower job to men and this also caused the consistence of male – female income difference Next, one of the causes of gender pay gap was discrimination, and “four types of discrimination, there were rational – legal, determinist, particularist and patronage” (Jewson and Mason, 1986) The social value of skills, the women had been undervalued about traditional skill due to the “historically inferior status” of them Besides, crowding “led to the excess supply of labor and along with the economic domination, the wage in the labor market reduced” (Bergmann, 1971) Moreover, female labor “faced with the larger degree of monopsony when compared with male labor, and the wage rate for women would be lower” (Manning, 1996) Furthermore, “the position of women in internal labor market was weak and this made the disadvantage for them as well as caused the gender earnings gap” (Kerr, 1950) In addition, “unionization and pay –bargaining were also an important factor in which explained the gender income difference, if women were less to be have their pay which determined

by collective bargaining and that was the cause of gender pay gap” (Anderson

et al, 2001) And there were some other factors which could explain the gap income between women and men such as compensating differentials, employer characteristics and secondary effects

In accordance with the Fawcett Society organization, which is the United Kingdom leading charity promoting gender equality and women’s rights at home, at work and in public life, there are several main causes of gender gap in earnings, such as the motherhood penalty, concentration in low wage sectors

and outright discrimination With regard to the motherhood penalty, it is said

that due to childcare responsibility, women tend to choose part-time work rather than full-time While part-time jobs do not require high skill, also means its employee is paid hourly wage lower than full-time job This organization also indicates that the average income of women earn 19.1% less than men when doing the same part job time, whereas in work full time, this gap is shortened about 9.4% Once women choose to reduce working hours to spend time with their children, they have sacrificed both current and future income Occupational discrimination or prejudices around the role of men and women still exist Job at cleaning, catering are often undertaken by women and paid

less than the construction work, engineering which are done by men The Fawcett Society organization also points out that 78% of the working in health, social care, low-paid sectors, shall be in charge by women Whereas men do 88% of job in STEM (Science, Technology, Engineering and Mathematics) industries, where have high payment Similar to above stereotypes, outright discrimination against women remains in the workplace Discrimination is expressed through direct and indirect form Direct discrimination happens when with the same job, women get a lower wage than men Meanwhile, indirect discrimination showing men take a higher earning than women in a job of equivalent value

Concurred with Fawcett Society about causes of gender income difference, the European Commission which is the EU's executive body and represents the interests of the European Union as a whole (not the interests of individual countries) supposes the source of male-female income difference can be created by “direct discrimination, the undervaluing of women’s work, segregation in the labor market, traditions and stereotypes, balancing work and private life” under the brochure “Tackling the gender pay gap in the European Union” This brochure has been published by European Commission

in 2011 Because of the effectiveness of European Union and national legislation, hence direct discrimination only explains a small part of gender income difference One of the main causes for women are paid less than men when doing a job of equal value is the way women's competences are valued compared to men's Women often do the jobs requiring similar skills, qualifications or experience, such as job in health, education, and public administration where are poorly paid and undervalued In details, based on the research of the European Commission organization, there were 32% of female workers participated in part time job, whereas this figure only accounted for 8% of male workers across the Europe The reason why women employees

preferred part time job to full time job was that they had to take on the role of family care

Meanwhile, in Vietnam, following the research of Nguyet and Binh (2007), the authors have pointed out the two groups which impact on gender earnings gap, there are noneconomic and economic groups The conceptions of traditional gender inequality represents for noneconomic factor These concepts about gender inequality and the social stereotypes are barriers to the development of gender balance, gender equality relations It was the feudal conception from thousands of years about the position and value of women in family and society Under the feudal conception, men have the right to participate in society, perform the function of production, and take responsibility as well as manage society, while women look after the home and children Men who have full command and disposition all large things in the family, whereas women execute, serve their husband and children The women are completely dependent on men, do not have any right to dispose of anything even for themselves Economic factor includes of characteristics of employee, education’s worker, labor element, and geography In details, characteristics of workers consist of those elements related to physical and gender such as age, marital status, health and per capita expenditure Education is a very important factor affecting the income of workers Jobs requiring high qualifications, skills complexity have higher wages than the simply jobs Therefore, people can access to higher education will have the opportunity to seek jobs with higher incomes Labor element includes professions, professional, work experience, work organization Typically, employee who works in the agricultural sector is paid less than works in industry and service sector due to requirements and qualifications of this sector are low In the same occupations, the workers' income depends on their expertise and work experience, since the complex work give a better wage than an easy job Moreover, employees with more

experiences usually do job faster and better than those with less experience, hence they take higher wage

2.2.2 The factors impact on gender wage gap

2.2.2.1 Non-economic factor

According to the World Bank (WB) in 2001, the concepts of gender inequality or the stereotypes of society about gender are obstacles to the development of gender balance, gender equality relationship between male and female

The perspectives from feudal time about the values, position of women

in family and society is very backward, but it is not easy to change, such as men are entitled to participate in social work, stand out performing the function of production, take responsible for social management, these things make men respected by society While women take on the role of reproduction and community, care and regeneration of labor, such as homeworker, childcare Most of the works often do not generate income and they then completely depend on men, nor have any right to dispose of anything even for themselves These are the causes that limit opportunities for women to access education, career choices These disadvantages prevent the improvement of the economic status of women and thus create inequalities in income than men

2.2.2.2 Economic factors

2.2.2.2.1 Characteristics of employee

Characteristics of worker include the factors related to the physical and the gender, such as age, health, and marital status of employee The empirical evidences show that the income of an employee depends on the age of hers When the worker is young, she gets a low wage, after that the wage will be increased along with the growth and accumulation of her human capital, and mitigates when she is elderly Moreover, the income of the young man worker

often increases faster than the young woman worker (Bojas, 2005) Next, health is also one of the factors that make up the income gap between men and women, the gender characteristics prescribe different conditions in men and women, these differences lead to the division of work in which the concentration of women in some careers is relatively few, this makes the wage

of the women do not avoid decline and thus cause wage differences between men and women Marital status has a similar impact to male workers and female workers, when they get married and have children, due to increase of the needs for their living, this makes the demand for work seeking in order to earn extra incomes for both male and female labor However, there is different thing between male and female, women have to take on more responsibilities

to care for family and children, since these limit the opportunity to participate

in production and hence their income is lower than men's

2.2.2.2.2 Education

Education is a very important factor affecting the income of workers Wage will be increased for the jobs requiring high qualifications and complex skills Boris (2005) presented the relationship between income and years of schooling of workers through wage and education curve, pointed out businesses were willing to pay the salary corresponding to each level of education, expressed the relationship between salary and number of years of schooling

2.2.2.2.3 Employment

Employment factors comprise of industry, expertise, experience and type of enterprise Typically, the employee works in the agricultural sector is paid less than other sectors because this sector does not require high skills and qualifications from employees, they just have good physical in order to undertake work well Besides, in the same industry, workers' income also depend on the expertise and experience of the themselves, because the

complex work is paid with higher wage than simple job and the worker has the time to expose job longer they can complete the job faster and better than those with less experience, so they then get higher wage

Type of enterprise is also one of the factors that affect earnings between men and women, the organizations are strictly governed by law, they will compliance the policy of gender equality and therefore women labor will receive income with more equality

2.2.2.2.4 Geographic factor

Income is paid to employees with ensuring to cover their life and family Because the standards of living and expenditures are different in various regions, so income is also different in diverse regions Ordinary, labors in urban area have higher income than rural areas in terms of the same nature and complexity job

2.3 Measurement of gender pay gap

The gender wage gap refers to the difference in income between female and male worker (Pay Equity Commission, 2012) In addition, this gap is also captured as a percentage (Statistics New Zealand, 2014) as below formula:

In which, pay for worker can be measured by hourly, weekly or monthly More details, when the purpose focuses on analyzing labor market and poverty outcomes for numerous of men and women, monthly earnings are preferable Meanwhile, hourly earnings are favorable in the case comparison earnings of smaller groups of workers in the same level of occupations or enterprises, with the more appropriate Usually, the gap measured by hours is smaller than by over the longer time periods This is because women have tendency to work fewer hours for income than men do in most of the nations around the world

2.4 The impact on economic - social development of gender wage gap

Come after World Bank 2001 (WB), gender inequality in income is one of the causes of poverty as well as a factor in a significant impediment to economic development Besides, the injustices that women suffer due to inequality, it also has the disadvantage of their family Income from labor is a key source of renewable energy to women workers not only of themselves but also the resources to ensure the quality of their family life The status of gender inequality in income leads to women are limited regenerative ability of labor, restricted access to technology, education and training along with more difficulties due to burden of workload families Furthermore, lacking of discretion in the family is the cause of the higher mortality rate of mothers and infants, family health and less children schooling attendance, especially female children

Moreover, gender inequalities in income, reduces productivity in the barracks and businesses, thereby, limits the potential for poverty reduction and sustains economic progress By obstructing the process of accumulation of human capital as well as restricting access to productive resources, the right to engage in production activities, leading to efficient allocation of resources in society Having lower income than men also causes limitation of creative possibilities and motivation to improve and enhance the productivity of labor

in women

In addition, gender equality, especially gender equality in income is targeted toward of all nations Gender equality in income enables to maintain a progress of society, prosperity and sustainable development It demonstrates the soundness, efficiency and revolutionary in commitment and implementation of guidelines and policies of countries in order to implement these objectives In other words, gender inequality in incomes is one of the

reasons for weakening the ability to manage the state of a country, thereby reducing the validity of the policy to develop

Aside from, empirical researches typically Haas (2007) has conducted a study on the relationship between economic development and gender pay gap

or the nexus of education attendance and wage inequality to the size of gender gap in earnings as well In Hass’s study, the author not only based on the theory

of both supply and demand and human capital but also applied the inverted – U curve of Simon Kuznets Kuznets’ inverted – U curve model which has the hypothesis states that in a country the per capita income and the amount of income have the relations with each other Cross – sectional data has been collected from the Unit Nations Human Development report in the year of

2005 Besides, a ratio of male - female earnings has been used as dependent variable, meanwhile an independent variable was deputized by gross domestic product (GDP) per capita Although the research has some unavoidable limitations, particular usages of the GDP per capital represented the economic development, in other words, it was not all aspects of development that would

be and also, the role of human capital was not supported in this paper Nevertheless, the results of the OLS regression analysis have showed that the size of male – female income difference was increasing when the economic process developed, exception for high level of per capital income; wage inequality and gender income difference had the positive relations

2.5 The impact on male – female income difference of female manager

Under the social psychology of intergroup relations of Tajfel (1982), individuals have tendency to prioritize members in their group than the members in other groups Following this theory, it might be stated that women

in managerial titles are likely to appreciate female workers than male workers, this can result in the influence on the wage of their subordinates and make the gender income difference narrower There are varieties of studies about the

impact of gender characteristics of manager on the gender gap in earnings, such as research of Hultin and Szulkin (1999, 2003), Cohen and Huffman (2007), Cardoso and Winter-Ebmer (2010), Shin (2012), Hirsch (2013), Hedija (2015) and so on

Hultin and Szulkin (1999) based on two interrelated datasets from the Swedish Level of Living Survey and the Swedish Establishment Survey in the year of 1991 in order to consider the effect of gender characteristics of manager on the wage of subordinated worker in Sweden The authors estimated the wage function of male and female workers, whereas one of the explanatory variables was the share of male on managers and supervisors, and this function was estimated separately for private and public sectors From their research, they came up with a conclusion that the proportion of male among managers and supervisors had a significantly negative effect on wage of female And this effect on private sector was clearly stronger than in public sector

The same result was conducted by Hultin and Szulkin in 2003, stated that the larger males were participant in managers and supervisors then the wider male – female income difference became In this research, Hultin and Szulkin used a matched employer – employee data, and the data covered amount of private firms of Sweden in the year of 2003 Aside from this, multi-level model was applied to examine the influence of male share on managers

and supervisors on the gender wage gap as well Hierarchical linear modeling

or multilevel modeling is one of the appropriate statistical methods which are applied for nested data (Bryk and Raudenbush, 1992) This method is used for some purposes such as prediction, data reduction and causal inference (Gelman, 2012)

Another research related to this field – gender income difference, Cohen and Huffman (2007) has used data from all large U.S private sector firms which

were collected by the U.S Equal employment opportunity commission (EEOC)

in 2002 Along with applying the hierarchical linear model, it allowed the authors to decompose the total variances in wages into three component parts: individuals, jobs and local industries Cohen and Huffman examined the influences of both the representation of women among managers and status position of female manager on wages for men and women Their findings confirmed the gender earnings gap reduced when having more females among managers, especially female managers hold high – status positions

Cardoso and Winter-Ebmer (2010) also explored the influence of female employers and gender segregation on wages in Portugal Their research based

on a linked employer – employee dataset which annually collected by the Ministry of employment in Portugal for the period from 1987 to 2000 These data covered the population of private firms with wage earns in the manufacturing and service industries The results from running OLS regression have been found out that female benefited from higher wages in female – led firm than in male – led firm More especially, the male – female income difference reduced by 1.5% when female led However, the findings also showed that the wages of both female and male were lower when there was a higher share of female in a firm

Shin (2012) has used compensation data from 7,711 executives who managed 831 U.S firms during the period from 1998 to 2005, in order to test the hypothesis that there was a larger of female directors on the compensation committee or board of directors, there was smaller gender gap in payment in there Moreover, another hypothesis assumed in this study was that when female seated on top decision – maker, which meant they had a really important role in the firm, this might contribute the career success of their female subordinates The benefits brought from such female leaders would lead to narrow the male - female gap on earnings However, this hypothesis has

not been supported due to the lack of data This hypothesis needed more numbers and caculations Beside, his research has applied the random – effect regression with robust standard errors, whereas information of observations was used to estimate the coefficiencies and so time–invariant variables The findings implied that creating greater positions has definitely effects on female executives’ compensation when having more female leaders on the top manager or on the board of directors, then the gender pay gap was clearly reduced

Next, in the study of Hirsch (2013), the author used the cross – sectional model of linked employer – employee data in 2008 The dataset had been collected by Institute for employment research and had been matched between German plants and all employees who worked for these plants The research aimed to test whether the unexplained gender pay gap was smaller in plants with higher share of females among managers or not In this study, Hirsch applied the Mincer wage regressions and added literatures in two dimensions, controlled for segregation effects by adding job – cell effects as well as investigated the impacts on gender earnings gap of first and second – level managers The findings had the same conclusion with some previous researches regarding to gender gap in earnings There was no doubt that the unexplained male – female income difference was significantly lower in plants with higher proportion of female among managers Furthermore, the effect was larger for the second – level manager than first – level manager because the second – level managers were more likely to be involved with hiring, grouping, and making promotion decision with their subordinates

Another research, in the study of Hedija (2015), this study has explored the influence of the gender characteristics in middle managerial position on the wage of directly subordinates Differing from the other studies, Hedija’ paper has used the data linked superior – subordinate on the level of individual

companies for the approach Data has been collected from two specific Czech hospitals, which were located in the same town The two methods have been applied to investigate the impact of gender characteristics on subordinates There were two estimations, the wage function and the average treatment effect on the treated estimation method The analysis of Mincer – type wage function showed that the gender pay gap decreased by 6.18 percentage points when having the female among managers of the department In addition, Hedija also used another method to prove his view on this He applied the average treatment effect on the treated estimation method This method also suggested that the gender pay gap was about 5.1 percentage points of employees under female middle managers and lower when compared to the employees under male middle managers The findings were similar in the approach using the data linked superior and subordinate data

Conceptual framework of the thesis as below