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    DESPITE FEARS, INCENTIVE PAY DOESN’T WIDEN GENDER PAY GAP, UNTANGLED STUDY FINDS

     

    Incentive pay schemes (IPS) are remuneration policies that tie an employee’s salary to their performance and meeting goals or objectives. Companies adopt these policies to elicit more effort from workers, improving the organisation’s performance. As employers strive to boost productivity, the adoption of IPS intensifies, and because IPS tend to increase intra-firm wage disparities, many scholars and policy makers have feared that their growing popularity may fuel a further widening of gender pay gap.

     

    As part of Project UNTANGLED, which investigates the impact of technology on the labour market, Cristiano Perugini and Fabrizio Pompei compared the wages of men and women in the same company, occupation or position to see whether IPS affect salary disparities. Using data from the Structure of Earning Surveys (SES), they analysed the wages of more than 6 million workers employed in 142,251 companies in Germany, France, Italy, Spain and the UK.

     

    Perugini and Pompei found that female workers, who accounted for 47% of their sample, on average earned 12.5% less than their male counterparts. The firm-level gender gap was the broadest in the UK, at 16% in the UK, and the narrowest in Italy (9.5%). Combining these data with information on adoption of IPS they found that a greater prevalence of IPS in a company narrows the gender pay gap.

     

    “There are a number of factors that can trigger a wage gap, and in our analysis we controlled for their impact,” said Cristiano Perugini. “In companies with performance-based remuneration the pay gap shrinks. This is probably because these companies attract a specific type of female worker, that is women who have similar skills, potential, ambitions to men and who are less constrained by household workloads. At the same time, these employers have better screening and monitoring tools to prevent discrimination.”

     

    Perugini and Pompei also found that the IPS are more often adopted by innovative organisations, where incentivising workers’ performance is vital to success. However, the positive effect of IPS on reducing gender pay gap varies between industries and, as the study finds, is related to the investments in ICT and intangible assets. The gap narrows only in firms that invest less in technology.

     

    The authors point out that more intensive investments in ICT, R&D, and brand development result in unpredictable working time, which make it more difficult for women to reconcile work and household responsibilities and thus reduce their chances to reach their targets. As a result, female employees earn less than their male counterparts.

     

    “Our study shows that it is not the IPS per se that exacerbate gender pay inequality, but the specific technological context in which they are implemented,” Fabrizio Pompei said. “This calls for policy arrangements aimed at changing the allocation across genders of unpaid work, as suggested by the Work-Life Balance Directive.”

     

    The Directive, which EU member states must implement by 2 August 2022, introduces a set of legislative measures to support work-life balance for parents and carers, encourage a more equal sharing of parental leave between men and women and address women’s underrepresentation in the labour market.

     

    The paper has been presented by Cristiano Perugini in a seminar held on the July 24 at the Chukyo University in Nagoya (Japan), supported by the Kansai University Fund for the “Theoretical and empirical research on the firm heterogeneity and the international economy”. Hosts: Fukuda Katsufumi (Chukyo University, Nagoya) and Kunihiro Hanabusa (Kansai University, Osaka)

     

     

    Cristiano Perugini, Fabrizio Pompei (2022). What drives the wage gap of vulnerable workers? Pay incentives, intangibles and gender wage inequality (Deliverable 4.2). Leuven: UNTANGLED project 1001004776 – H2020. 

     

    The paper is available here

     

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    UNTANGLED SEEKS PAPERS FOR 9 NOVEMBER CONFERENCE FEATURING ANNA SALOMONS

    Please submit full papers or extended abstracts to Ilse Tobback at: ilse.tobback@kuleuven.be.

    We welcome contributions addressing the implications of technological transformation, globalisation and demographic change for:

    • Heterogenous impacts of mega trends on labour market outcomes
    • Work related migration and skills
    • Education and future skill needs, productivity growth
    • (Regional/Rural-urban) convergence/divergence, EU economic governance, trade
    • Technology and human capital
    • (Wage/regional) inequality, social policy
    • Covering the combined impact of two or more of the driving forces – technological transformation, globalisation, and demographic change – is considered an added value.

    All the detailed information is in the Call for Papers below. Any queries can be emailed to Ilse Tobback at: ilse.tobback@kuleuven.be

     

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    BACHMANN AND GONSCHOR’S PAPER PUBLISHED IN IZA INSTITUTE DISCUSSION PAPER SERIES

     

    “Technological Progress, Occupational Structure and Gender Gaps in the German Labour Market” analyses how changes in the occupational structure attributed to technological progress have influenced the relative position of women in the German labour market from 1985 to 2017.

     

    The authors find that the share of women working in high-paying occupations, mainly performing non-routine cognitive jobs, has increased strongly in recent decades. However, their wages have not risen to the degree that would be expected. Even though women work in high-paying occupations, they earn less than their male colleagues in the same positions. The results indicate that technological progress has the potential to benefit women, but this potential is not fully realised.

     

    Ronald Bachmann, Myrielle Gonschor, Technological Progress, Occupational Structure and Gender Gaps in the German Labour Market, IZA DP No. 15419, July 2022

    The article can be downloaded from: https://docs.iza.org/dp15419.pdf

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    LEWANDOWSKI ARTICLE PUBLISHED IN THE WORLD BANK ECONOMIC REVIEW

    “Technology, Skills, and Globalization: Explaining International Differences in Routine and Nonroutine Work Using Survey Data” analyses the extent to which the same jobs performed in different countries involve different tasks. Using survey data from 47 countries, Lewandowski and co-authors Albert Park, Wojciech Hardy, Yang Du and Saier Wu found evidence confirming substantial cross-country differences in the content of work within occupations. In particular, they find that work in poorer countries is more routine-intensive, especially in high-skilled occupations.

     

    The authors also show that most of the international differences in the intensity of routine tasks can be attributed to differences in technology use (computers, ICT, robots), followed by the supply of skills – both of which are lower in less developed countries – and then by globalization.

     

    Piotr Lewandowski, Albert Park, Wojciech Hardy, Yang Du, Saier Wu, Technology, Skills, and Globalization: Explaining International Differences in Routine and Nonroutine Work Using Survey Data, The World Bank Economic Review, 2022;, lhac005, https://doi.org/10.1093/wber/lhac005

     

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    THIRD VIRTUAL CAFÉ BRINGS TOGETHER OVER 20 LABOUR MARKET EXPERTS TO DISCUSS THEIR WORK

    The event hosted seven presentations of research and one conference announcement. To find out more, please visit our events section.

    The next Open Virtual Expert Café will take place on 31 August 2022, from 4-5.30 pm CEST. Register here to present your own work, or to just listen in and join the discussion.

    2021 © UNTANGLED. All rights reserved.
    This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 101004776

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