Occupational sex segregation and management-level wages in Germany: What role does firm size play?

The paper analyzes the gender pay gap in private-sector management positions in Germany based on data from the German Socio-Economic Panel Study (SOEP) for the years 2000-2009 using fixed effects models and Heckman’s correction. It focuses on the effect of occupational gender composition on fulltime wages, and the extent to which wage penalties to management-level employees working in predominantly female occupations are moderated by the firm size—an effect that has not yet been analyzed in the literature. Drawing on human capital theory, devaluation of women’s work and organizational approaches, we find wage penalties for “women’s work” in managerial positions only in large firms. This speaks for a pronounced devaluation of predominantly female occupations for managers in these firms, which might be due to the observation that large firms tend to be older and characterized by more formalized structures, more established “old-boy networks,” and a wider gap between wages for predominantly male and female occupations. Interestingly we find a positive segregation effect in small firms for women, showing higher wages for those who work in women’s occupations. More research is needed to explain this. One argument may be that in small firms—where larger proportions of women are managers and “old-boy networks” may therefore be less common—female managers have more power to overcome traditional structures of inequitable pay for women’s and men’s occupations and to give predominantly female occupations a slight advantage over men’s occupations.