Closing the Gender Pay Gap in the US Federal Service: The Role of New Managers

Feb 24, 2023

Abstract: This paper estimates the effects of managerial turnover on the unexplained gender pay gap in the US Federal civil service from 1982-2014. Using an event study design focusing on the arrival of the first new manager at the employee’s duty station, we find that changes in managerial teams reduce the unexplained gender pay gap by around 1.5 log points in the first year and up to 6 log points in subsequent years. Importantly, that effect is roughly 30% larger when that new manager is female. The main homophily channel operates through increases in pay grade: female employees receive almost 50% more pay grade increase following the arrival of a new female manager. We also find that women managers have the greatest effect in federal agencies, with a critical mass of women in management positions. These findings are echoed in female employees’ responses to the Federal Employee Viewpoint Survey. We conclude that even highly regimented pay systems are not immune to discretionary managerial actions, which may impact the gender pay gap.

Pages: 79

Date Added: 9/20/2022, 7:10:55 AM

Reading Notes:

Objective: To understand the role of managers in the gender pay gap by using variation from changes in managers in the US federal civil service

Importance: Managerial effects in the structured pay environment of the federal government will be an underestimate of the effects more broadly

Background: The Federal Salary Reform Act of 1962 set up the "General Schedule" GS. In 1990 a reform set locality adjustments.

20% of federal employees are paid on an alternative schedule to the GS schedule

Data & Key Variables: Administrative payroll data from OPM 1982-2014

Sample: White collar, salaried, permanent employees, employed 5+ years. Offices with at least 15 employees

Place of employment info: agency, subagency, duty station

Job info: occupation, manager/supervisor/employee, full-time/part-time

Pay info: schedule, step, grade, quarterly pay

HR data from hire/separation date: age, education, reason for separation. Gender imputed from name

Federal Employee Viewpoint Survey (FEVS)

Methodology: Event study around entry of a new manager

Preferred sample: at most 5 managers

Dependent variable: log pay residuals, controlling for locality and observable characteristics

Treatment= first new manager. Future managerial changes not used as additional treatments

Results: Managerial turnover reduces the gender pay gap by 3.5 log points over 4 years for new male managers and almost 5 log points for new female managers

All employees have more pay grade increases with the arrival of a same-gender manager, but female employees benefit twice as much

Key Table/Figure:

Dani’s Reading Notes

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