Quotas the next bullet to fire at durable glass ceiling
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Quotas the next bullet to fire at durable glass ceiling

It is a depressing, dismal and enduring fact that, despite decades of calls for change, well-meaning initiatives and societal awareness, women are still fundamentally under-represented on the nation's boards, underpaid by employers and under-recruited in job interviews.

The average pay gap between men and women may be between 11 per cent and 12 per cent but that disguises some big numbers across different salary levels - what we call wages distribution. Even when men and women have the same characteristics, there is an increasing gender pay gap across the wages distribution due to different returns to the same characteristics. We shall call this the ''glass ceiling'' effect. In some cases this is as high as 26 per cent - and it's worse in the private sector than the public.

Illustration: Jamie Brown

Illustration: Jamie BrownCredit:Jamie Brown

But what's causing this? And why - even after decades of trying to change - haven't we been able to even scratch the glass ceiling, let alone shatter it? The truth is, the complex reasons behind it mean the glass is made of tough stuff.

A fundamental challenge for labour economists like me is to identify the extent to which observed gender differences in pay for apparently identical men and women are due to discrimination, to other unobservable factors, or to intrinsic differences between men and women. An example is expectations of family formation and fertility. This is private information, so employers work from averages. That means women may not get pay rises, may not get promoted when they deserve to, and may not get offered the jobs they deserve. But statistical discrimination is not the only explanation.

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Women's willingness to pursue outside offers and their ability to accept these may differ from that of men, reinforcing their poorer position in the labour market. Moreover, many labour markets are hierarchical, and promotions and appointments procedures can widen gender pay gaps. Promotion procedures favour men and criteria can perpetuate gender gaps. For example, studies of US law firms show how criteria for promotion, such as excessively long hours of work, can widen gender pay gaps towards the top of the field.

Prejudice or discrimination at the hiring stage can also matter because it can affect women's willingness to bargain over offered wages. Suppose a woman has overcome the hiring barrier for the organisation where she wishes to work and has been offered a job. The woman may be so grateful for the job offer she will not bargain as aggressively for her starting salary. Moreover, since her outside options are poorer, even if she were to bargain aggressively, she would still get a smaller share of the cake.

Studies have shown employers' tastes for discrimination may arise because of what sociologists refer to as ''homo-social'' preferences, a social preference for being with members of one's own gender. Put simply, men may feel more comfortable working with other men.

Psychological studies also reveal why women suffer discrimination in some roles but not others. They suggest two forms of prejudice: first, women are perceived less favourably than men as potential leaders. Second, if women do manage to obtain a position of leadership, they are then evaluated less favourably because they do not fit society's prescriptions of what is appropriate behaviour for women. Looking through the glass ceiling from above, what you can see a dismal, enduring and complex picture. But there are still steps we can take to find a way through it.

First, mentoring. US research finds that women executives working in women-led firms earn 15 per cent to 20 per cent more in total compensation than women working in other firms. Women-led firms also hire proportionately more top women executives. Second, we should be encouraging the formation of networks. This is best done at the higher levels of an institution or organisation.

Finally, we need to make use of quotas to ensure increased female representation at the higher levels of companies and organisations. We need a critical mass of women in high positions in the public and private sectors. The more women we have in leadership roles, the more role model effects, network formation and mentoring.

Norway is a beacon here. In 2008, it enforced 40 per cent quotas on corporate board membership at all publicly listed companies, and reached that target in a year. Perhaps it is time for Australia to follow Norway's example. Our government is implementing an incremental approach through the Workplace Gender Equality Act. The act requires all companies with 100 employees or more to disclose the gender composition of boards, executives, and at various levels throughout the company.

The idea is presumably that if companies have to explain their proportions female and remuneration, they will be more likely to change. Is this going far enough? No. It means it will take years, if not decades, for gender equality to be achieved. In the meantime, women are still tapping hopefully on a thick slab of glass.

Alison Booth is a professor of economics at ANU. She will speak at ANU Public Policy 2013, which runs from Wednesday to Friday at the Crawford school of public policy: crawford.anu.edu.au/policyweek

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