Economics of network, gender, and CEO compensation
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One of the most perplexing phenomenons in economics is the existence of differences in average wages between the sexes for the same job, despite far less gender dispersion in educational investments, credentials, career commitment, motivation, and training. The pay gap explanations till date are too restrictive in their approach and application, which prompts the following question: Are we missing something here? This collection of works irrefutably show that under some circumstances, social capital, which is defined as the reciprocal obligations that result from business relationships, becomes a viable candidate in explaining differential earnings between men and women. Social capital is an important component of worker productivity and, therefore, has earnings implications. Further, it is also challenging for women to acquire. Not having time due to the demands of home production and male-centric design of the networking process are to blame for this. The first essay uses a multidimensional signaling model of wages showing this assertion. The next two essays empirically test the key model predictions using a sample of CEOs of US publicly traded firms. First, essay two empirically validates that a sample of CEOs is an appropriate choice to test the model's predictions. Panel data techniques are used to show that social capital is both priced and productive. Next, essay three shows that only male CEOs receive rewards from having a large social capital. On the contrary, female CEOs are penalized for having a large social capital. Additionally, two surprising findings were revealed. One, female CEOs significantly out earn male CEOs, despite facing penalty on social capital. Two, female CEOs are substantially rewarded for their performance in comparison to male CEOs. All of these results pass several endogeneity and robustness tests.