Gender Pay Gap across Cultures

We employ a cross-country sample to examine whether cultural differences help explain gender compensation variations across corporate executives. The results show that the cultural differences, which are embedded in societies from long prior to the compensation decisions, provide significant explanatory power to the observed gender gap in executive compensation. Using an Oaxaca-Blinder decomposition combined with variables that have previously been shown to be significant determinants of executive compensation, we find that adding cultural measures to the model increases the explanatory power from 44% to 95% of the gender compensation gap.