The Glass Ceiling and The Gender Wage Gap: Evidence from UK Firms

Abstract

This paper examines the closing of the gender pay gap in the UK between 2017 and 2023. We build a model in which the firm's wage gap is determined only by the difference in market wage rates for high and low paying jobs and the endogenously determined fraction of the firm's women in high paying jobs. Empirically, we merge administrative firm-level panel data on the population of UK firms with more than 250 employees with accounting firm-level data from FAME and regional data from the National Office of Statistics. Uniquely, the data allow an examination of the changing gender composition at each quartile of pay within firms. Firms do not close the Gender Pay Gap just by paying the women in their companies more. Rather, firms that have successfully reduced their gender pay gap have changed the gender composition within their organisation by filling higher paying roles with a greater proportion of women. The evidence suggests pay gender equality is not predominately being addressed by correcting discriminatory pay practices, nor at a cost to men's employment, but rather by affording women equal opportunity of obtaining higher paying positions within firms - an easing of the glass ceiling. Joint paper with Brian G. M. Main (University of Edinburgh Business School)