Gender Earnings Differentials in Total Pay, Base Pay, and Contingent Pay

Abstract

Using data from a 1988 survey of business school graduates, the authors analyze gender differentials in earnings by form of pay—total pay, base pay, and contingent pay—with controls for human capital, occupation, job level, and individual characteristics. The results indicate that within narrowly defined occupations and jobs, most of the unexplained difference in total pay between the men and women in the sample was due to gender differences in the portion of pay that was contingent on job performance. The greater importance of contingent pay in the earnings of the men than of the women may reflect differential treatment of men and women by firms, gender differences in performance, gender differences in risk preferences, or some other sorting mechanism.