Research Highlights Featured Chart

July 17, 2023

Bonding with the boss

How much does socializing at work contribute to the gender pay gap?

Tyler Smith

Source: Dani Hoz

While women have made enormous progress in the workplace, they still haven’t completely broken through the glass ceiling. Women occupy just 22 percent of the C-suite level positions in US corporations and only 5 percent of positions at the CEO level.

In a paper in the American Economic Review, authors Zoë Cullen and Ricardo Perez-Truglia provide evidence that part of the struggle to get promoted comes from personal relationship dynamics in the workplace. They say that more face-to-face interactions with managers of the same gender leads to faster career advancement for men.

The results come from a large commercial bank in Southeast Asia, whose identity was kept confidential. The authors examined how promotions were affected by a company policy that rotated managers between teams. 

Figure 6 from the authors’ paper shows how pay grades changed for men and women before and after a manager switch.

Figure 6 from Cullen and Perez-Truglia (2023)

The chart depicts the effects for female employees as red squares and the effects for male employees as blue circles. The vertical bars are 95 percent confidence intervals. Panel A represents the effects of gaining a male manager, that is, transitioning from a female manager to a male manager as opposed to transitioning to a different female manager. Panel B shows the effects of losing a male manager.

Comparing panels A and B shows that the effects of losing a male manager roughly mirrors the effects of gaining a male manager. When female employees either gain or lose a male manager, they do not see an increase or decrease in their pay grade. Male employees, however, end up with higher pay grades after gaining a male manager and lower pay grades after losing a male manager.

Using a number of robustness checks, the researchers found that male-to-male socializing dynamics could explain as much as 40 percent of the gender gap in promotions at the company in the study.