Do Men and Women Both Enjoy a Wage Premium for Working in Finance?
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Over the last three decades, compensation in financial sector jobs has grown dramatically. However, it is unclear whether men and women have received similar increases in their earnings. Also, do men and women enjoy the same wage premium for working in finance? That is, do men and women who work in finance earn more than their counterparts working in nonfinance jobs? And how do wage premiums vary by gender and parental status? Previous research has found that women in finance generally earn less than men with comparable qualifications. In addition, being a parent has different effects on wages for men and women: fathers earn much higher wages than men without children, while mothers earn lower wages compared to childless women. Gendered beliefs about risk support these empirical findings: fathers are more likely to be seen as prudent risk-takers—critical attributes for successful financiers—because their fatherhood status accords them a sense of both responsibility and obligation to provide for a wife and children. Women, on the other hand, are perceived as too risk-averse or too prudent. On top of that, mothers are perceived as not willing to put in the long hours required to be successful in finance. This study uses data from the Current Population Survey (CPS) March files from 1975 to 2009. The CPS survey, conducted by the Census Bureau and the Bureau of Labor Statistics, is representative of the U.S. population. The authors use the March data because it includes both earnings in the previous year and earnings from bonuses, which together provide a more complete picture of wages in finance and other professional jobs.