Women CEOs Increase Company Performance and Lower the Gender Wage Gap

A study led by Luca Flabbi, an economist at the University of North Carolina at Chapel Hill, finds that companies with a woman CEO tend to perform better and the gender wage gap in these companies led by women tend to shrink for women at the higher end of the pay scale.

Researchers reviewed data on one million workers in Italian manufacturing over a 17-year period. They found that if a firm had a workforce that was at least 20 percent women and was led by a woman, there was a 14 percent increase in sales over other firms. The authors suggest that women CEOs place their women workers in jobs that produce efficiency and gender discrimination in job assignments is eliminated producing great productivity.

The study also found that in firms led by a woman, the wage gap among the 25 percent highest-paid workers was reduced by 10 percent over firms led by men. For the low-wage workers who had a woman CEO, the gender wage gap widened slightly. For firms led by men, the wage gap at the highest pay levels increased but the gender pay gap decreased for workers at the bottom of the pay scale.

The full study, “Do Female Executives Make a Difference? The Impact of Female Leadership on Gender Gaps and Firm Performance,” was published in The Economic Journal published by Oxford University Press. It may be accessed here.