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Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments

Oriana Bandiera, Greg Fischer, Andrea Prat, and Erina Ytsma

American Economic Review: Insights. Dec 2021, Vol. 3, No. 4: Pages 435-454

Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments^†

Oriana Bandiera¹, Greg Fischer², Andrea Prat³ and Erina Ytsma⁴

¹Department of Economics and STICERD, LSE, and CEPR (email: [email protected])

²School of Public Policy and STICERD, LSE, and CEPR (email: [email protected])

³Columbia University and CEPR (email: [email protected])

⁴Tepper School of Business, Carnegie Mellon University (email: [email protected])

Abstract

Existing empirical work raises the hypothesis that performance pay—whatever its output gains—may widen the gender earnings gap because women may respond less to incentives. We evaluate this possibility by aggregating evidence from existing experiments on performance incentives with male and female subjects. Using a Bayesian hierarchical model, we estimate both the average effect and heterogeneity across studies. We find that the gender response difference is close to zero and heterogeneity across studies is small, while performance pay increases output by 0.36 standard deviations on average. The data thus support agency theory for men and women alike. (JEL C11, C90, J16, J31, J33)

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Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments†

Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments^†