The Glass Ceiling and the Paper Floor: Gender Differences Among Top Earners

October 23rd, 2014
in econ_news

from the Minneapolis Fed

Despite making large inroads, females still constitute a small proportion of the top percentiles: the glass ceiling, albeit a thinner one, remains. We measure the contribution of changes in labor force participation, changes in the persistence of top earnings, and changes in industry and age composition to the change in the gender composition of top earners. A large proportion of the increased share of females among top earners is accounted for by the mending of, what we refer to as, the paper floor - the phenomenon whereby female top earners were much more likely than male top earners to drop out of the top percentiles.

Follow up:


We also provide new evidence at the top of the earnings distribution for both genders: the rising share of top earnings accruing to workers in the Finance and Insurance industry, the relative transitory status of top earners, the emergence of top earnings gender gaps over the life cycle, and gender differences among lifetime top earners.

Note from Econintersect:

If you can stomach dry reading, this is an important study. It contains a lot of juicy data and fact by occupation. One portion of the conclusion follows:

Although we have intentionally remained relatively descriptive in this paper, our fi ndings potentially have important implications for a number of aspects of the U.S. economy. There- fore, rather than concluding with a summary of our ndings (for that, we refer readers to the introduction), we will conclude by mentioning some areas in which our empirical observations suggest the need for complementary theoretical work and further empirical analysis using other data sources.

We found that although the share of females among the top 1 percent has increased steadily over the last 30 years, the fraction of females in the top 0.1 percent has barely increased during the last decade, and the gender composition of both top earning groups is still very di erent from the composition of the bottom 99 percent. These ndings reinforce the need for research into the factors that can account for both the glass ceiling and the paper oor. Our analysis of lifetime top earners revealed that the timing of the emergence of the top earnings gender gap is consistent with the hypothesis that career interruptions may be an important consideration. Our nding that industry composition plays very little role in explaining either the level or the change in the top earnings gender gap suggests that in this respect, selection into particular rms or jobs may be more important than selection into particular industries. Unfortunately, the SSA data lack many of the important variables that would be required for a more complete answer to this question: children, marital status, and work hours.

The large temporary component in top earners' earnings, the increasing persistence of top earner status, and the relatively weak relationship between annual top earners and lifetime top earners, all suggest the need for a comprehensive analysis of the dynamics of top earnings. Although an extensive literature has proposed and estimated various statistical models that provide a good t to the dynamics of earnings for the bulk of the distribution, little is currently known about how well this class of models ts earnings dynamics for top earners.

.... the rise of the Finance and Insurance industry in accounting for top earners of both genders suggests a need for better theories of labor compensation in this sector. Why is such a large share of labor earnings concentrated in a single industry? Does this reflect the extraordinarily high productivity of this industry? Or do these earnings reflect rents? And if so, rents to what? A useful starting point would be to study the top of the distribution of earnings across and within fi rms, within industries.

[click on image to read the entire study]

Source: http://www.minneapolisfed.org/research/WP/WP716.pdf









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