New Evidence Shows Gender Inequality in Top Incomes

Research by INET grantees Atkinson, Casarico and Voitchovsky shows that women are starkly underrepresented in top earning brackets across a range of different countries

An old Chinese proverb says that “Women hold up half the sky.” While women are responsible for many economic and financial decisions within the home, however the inequalities they face in the economic sphere are near universal.

In a new paper on “Top Incomes and the Gender Divide” INET grantees Antony Atkinson, Alessandra Casarico and Sarah Voitchovsky show that in a broad cross section of countries, women make up only one fifth to one third of those in the top ten percent of income recipients. Higher up in the income distribution, the representation is even worse, with women constituting only 14 to 22 percent of the top one percent. While the extent of the gender pay gap in the US is a hotly debated topic — estimates range between 78 and 95 cents on the dollar — it is widely accepted that women tend to work in lower paying jobs than men do. Presenting early results at a panel on the Glass Ceiling in International Perspective at the INET Paris conference in 2014, Professor Casarico provided powerful evidence of the extent of the discrepancy in top income brackets using newly available income data.

That the glass ceiling many women experience represents a greater cost to the economy as a whole than we might imagine was emphasized in the paper presented by INET advisor Judy Tsui, on that same panel that discussed “Board Gender Diversity, Audit Fees and Auditor Choice.” This showed that gender-diverse boards pay higher audit fees and are more likely to choose specialist auditors compared to their peers, a result that points to higher audit quality amongst boards with female directors.

The policy implications of these results are still unclear, though. As INET Senior Economist Pia Malaney points out, enforcing diversity quotas in some countries such as France and Norway has been extremely successful. In others such as India, evidence suggests that board appointments of women are often in name only in order to fulfill legal requirements. It has been suggested, though, that the long-term effect, even in such cases, is to break down the psychological and cultural barriers that prop up the glass ceiling.

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