Dynamics of the Gender Gap for Young Professionals in the Corporate and Financial Sectors

Marianne Bertrand, Claudia Goldin, Lawrence F. Katz

NBER Working Paper No. 14681
Issued in January 2009, Revised in December 2011
NBER Program(s):Development of the American Economy, Labor Studies

This paper assesses the relative importance of various explanations for the gender gap in career outcomes for highly-educated workers in the U.S. corporate and financial sectors. The careers of MBAs, who graduated between 1990 and 2006 from a top U.S. business school, are studied to understand how career dynamics differ by gender. Although male and female MBAs have nearly identical (labor) incomes at the outset of their careers, their earnings soon diverge, with the male annual earnings advantage reaching almost 60 log points at ten to 16 years after MBA completion. We identify three proximate reasons for the large and rising gender gap in earnings: differences in training prior to MBA graduation; differences in career interruptions; and differences in weekly hours. These three determinants can explain the bulk of gender differences in earnings across the years following MBA completion. The presence of children is the main contributor to the lesser job experience, greater career discontinuity and shorter work hours for female MBAs. Some MBA mothers, especially those with well-off spouses, slow down in the labor market within a few years following their first birth. Disparities in the productive characteristics of male and female MBAs are small, but the pecuniary penalties from shorter hours and any job discontinuity are enormous for MBAs.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w14681

Published: Bertrand, Marianne, Claudia Goldin, and Lawrence F. Katz. 2010. "Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors." American Economic Journal: Applied Economics, 2(3): 228-55. DOI: 10.1257/app.2.3.228