Is gender pay gap low in plants with more female managers evidence from small and medium entreprises of vietnam 2007

Tran Thi Hieu

Master’s Thesis

VNP20-2015

UNIVERSITY OF ECONOMICS, HO CHI MINH CITY
VIET NAM – NETHERLANDS PROJECT FOR M.A. PROGRAM IN
DEVELOPMENT ECONOMICS

IS GENDER PAY GAP LOW IN PLANTS WITH MORE
FEMALE MANAGERS? EVIDENCE FROM SMALL AND
MEDIUM ENTREPRISES OF VIETNAM 2007
----------o0o---------

A thesis submitted in partial fulfillment of the requirements for the degree of
MASTER OF ARTS IN DEVELOPMENT ECONOMICS
By
Tran Thi Hieu

Supervisor
Dr. Pham Dinh Long
Nov – 2015


Tran Thi Hieu

Master’s Thesis

VNP20-2015

ABSTRACT
The goal of gender equality in income is not only an important matter
of human rights but also basic requirement for development of fair and
efficiency. Therefore, study on the state of gender inequality in income has
the significant implications in moving toward the equality in society and
enhancing the efficiency of economic and social growth. Actually, there have
been many previous studies related to the issues of gender income
difference, particularly the factors impact on reducing the gender gap in
earnings. Inheriting these previous researches, my dissertation attempts to
investigate whether the gender gap in earnings is low in the establishments
with more female managers. Using a sample size of 1043 employees and
2492 enterprises were surveyed in the Small and Medium Enterprises (SME)
in Vietnam in the year of 2007, matching employer and employee data and
distinguishing occupation the study ends up 345 job–cells. In addition,
ordinary least squares modeling and ordinary least square with job-cell fixed
effects are applied to explore the effect on male – female income difference
of proportion of female manager. Various explanatory variables for
characteristics of workers and plants are used as control variables. Result
reveals that there is a negative relationship between the female share in
managers and gender pay gap, and the education has a significant statistic
and strong impact on the wage of the labors.

Key words: Gender pay gap, matched employee – employer data


Tran Thi Hieu

Master’s Thesis

VNP20-2015

ACKNOWLEDGEMENTS
This thesis is completed with not only painful process but also enjoyable
experience. Fortunately, throughout the process I always got a lot of helps and
supports from many people in order to make thesis possible. On the same
occasion, I would like to express my gratitude to all of them.
Foremost, I would like to give my sincere gratitude and special
appreciation to my academic supervisor Dr. Pham Dinh Long, for his patience,
motivation, enthusiasm, and immense knowledge. His guidance helped me in
all the time of research and writing of this thesis.
Similarly, I sincerely thank to the Scientific Committee and staffs of
Vietnam-Netherland Program for their willingness to provide information
during the last time.
Last but not the least, I would like to thank my family and classmate at
VNP20 for their backing and helping so that I can complete this thesis.

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION .......................................................................................4
1.1.

Problem statement .......................................................................................................... 6

1.2.

Research objective ........................................................................................................... 8

1.3.

Structure of research ...................................................................................................... 9

CHAPTER 2: LITERATURE REVIEW ........................................................................ 10
2.1. The definitions ................................................................................................................. 10
2.1.1. Gender ............................................................................................................................ 10
2.1.2. Gender equality .......................................................................................................... 10
2.1.3. Gender gap in earnings ........................................................................................... 11
2.2. Cause of gender wage gap and the factors impact on gender wage gap 12
2.2.1. Cause of gender wage gap ..................................................................................... 12
2.2.2. The factors impact on gender wage gap ......................................................... 16
2.2.2.1. Non-economic factor ....................................................................................... 16
2.2.2.2. Economic factors ............................................................................................... 16
2.2.2.2.1. Characteristics of employee ................................................................. 16
2.2.2.2.2. Education ...................................................................................................... 17
2.2.2.2.3. Employment ................................................................................................ 17
2.2.2.2.4. Geographic factor ...................................................................................... 18
2.3. Measurement of gender pay gap ................................................................................ 18
2.4. The impact on economic - social development of gender wage gap.......... 19
2.5. The impact on male – female income difference of female manager ........ 20
CHAPTER 3: OVERVIEW OF GENDER WAGE GAP IN VIETNAM ...................... 25
3.1. Overview the status of gender gap in earnings in Vietnam ........................... 25
3.2. The factors impact on male – female income difference ................................. 31
3.2.1. The age of employee ................................................................................................ 31

3.2.2. Education ...................................................................................................................... 32
3.2.3. Employment ................................................................................................................ 32
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Tran Thi Hieu

Master’s Thesis

VNP20-2015

3.3.4. Geography .................................................................................................................... 32
CHAPTER 4: METHODOLOGY ................................................................................... 34
4.1. The data ................................................................................................................................. 34
4.2. The variables ....................................................................................................................... 35
4.2.1. Education ..................................................................................................................... 35
4.2.2.

Seniority .................................................................................................................... 36

4.2.3.

Age of employee .................................................................................................... 36

4.2.4.

Size and Industry .................................................................................................. 36

4.3.

The Econometrics Models and Results................................................................ 37

CHAPTER 5: CONCLUSION, POLICY IMPLICATIONS AND LIMITATIONS .... 42
5.1. Conclusion ............................................................................................................................ 42
5.2. Policy implications ........................................................................................................... 42
5.3. Limitations ........................................................................................................................... 43
REFERENCES................................................................................................................... 44
Bibliography .................................................................Error! Bookmark not defined.

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

LIST OF TABLES

Table1: Human development index and Human development index in
Southeast Asia Area ........................................................................................................ 25
Table2: The share of women’s labor force participation ....................................... 26
Table 3: The share of female in plants ....................................................................... 27
Table 4: Summary statistics ......................................................................................... 38
Table 5: Wages and female shares in managers ...................................................... 38
Table 6: Wages regression ............................................................................................ 39

LIST OF APPENDICES

Appendix 1: Correlation of variables .......................................................................... 47
Appendix 2: Statistics variables................................................................................... 47
Appendix 3: OLS wage regression ............................................................................... 48
Appendix 4: OLS wage regression with job – cell fixed effect ............................... 49
Appendix 5: Test for heteroskedasticity .................................................................... 49
Appendix 6: Test for multicollinearity ....................................................................... 50
Appendix 7: The individual categories of ISIC.......................................................... 50

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

ABREVIATIONS
ILO

International Labor Organization

VGCL

The General Labor Confederation of Vietnam

SMEs

Small and medium enterprises

DWC

Division of Workers’ Compensation

CEDAW

The Convention on the Elimination of all forms of Discrimination

against women
OECD

Organization for economic co-operation and development

STEM

Science, Technology, Engineering and Mathematics

WB

World Bank

GDP

Gross domestic product

HLM

Hierarchical linear modeling

OLS

Ordinary least square

EEOC

Equal employment opportunity commission

HDI

Human Development Index

GDI

Gender Development Index of Vietnam

UNDP

United Nations Development Programme

WEF

World Economic Forum

GSO

The General Statistics Office of Vietnam

VHLSS

Vietnam Household Living Standards Survey

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

CHAPTER 1: INTRODUCTION
1.1.

Problem statement
Gender pay gap is a global problem. Indeed, according to Nguyet and

Binh (2007), male – female income difference is not only one of the root causes
of poverty but also major factor that distributes to hinder the development
process. The greater gender gap in earnings are, the more poverty it has to pay
dearly for that as well as more malnutrition status, illness and other hardships.
In addition, economic growth will bring more effective for the reduction of
poverty level in the country which has a higher level of gender equality.
Moreover, inequalities in income between women and men prevent the equal
development and this makes the use of resources in society inefficient.
In fact, the situation of gender inequality in earnings occurred in many
countries, especially in the developing countries. It might be said that the cause
of this condition primarily rooted traditional perspectives and preconceived
ideas in the social about the male-supremacy in many countries. Thereby, these
lead to the restriction of opportunities for women to access the education and
training, the choice of professions, an opportunity to improve professional

qualifications. The distribution of labor between men and women in different
occupations, employment arrangements and job positions in the same business
line is also obvious differences, which greatly affected on the difference in
gender income. Furthermore, women also have fewer opportunities to access
to these services as well as other basic resources such as water, transportation
and marketing, capital, etc. These things certainly impact on their
improvement of the condition and economic status.
In Vietnam, as reported by the International Labor Organization (ILO) on
7th March, 2013, the gap of income between men and women in Vietnam was
continuously increasing while the proportion of women in work force was
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Tran Thi Hieu

Master’s Thesis

VNP20-2015

higher than other countries in the world. Approximately 72% of women
participated in the labor force in Vietnam and this ratio was higher than that in
most of other countries worldwide. Nevertheless, Vietnam was one of the few
countries where the gender wage gap was increasing in contrast with the trend
in most of other countries in the 2008-2011 period compared with the period
1999-2007. Moreover, according to the 2012-2013 Global Wages Report of the
ILO, gender income gap of Vietnam increased by 2% in the recent period.
Statistical data of the General Department of Statistics in 2011 indicated that
women's income was lower than men’s income, approximately 13%. Also, the
General Labor Confederation of Vietnam (VGCL) conducted a survey of
employees’ salary in enterprises in 2012. This organization saw that wage of

female workers was less, only 70-80% of their male colleagues. Besides, Labor
Survey Report published in 2012 stated the average monthly income of women
was less than men’s in all economic sectors, state, non-state and foreign
investment. Even in occupations which primarily recruited focus on women
such as health care, social work and sales, women still had a lower salary than
male fellowship. More specifically, the VGCL survey found that women often
did the normal work whereas male undertook the management positions.
Due to the important of this field, there were thus a lot of researches
about gender pay gap conducted in the past indicating the determinants of
difference in wage of women and men as well as providing solutions to reduce
this gap such as Anderson, Tracy, et al (2001), Hultin and Szulkin (2003),
Manning (2006), Blau and Lawrence (2007), Cohen and Huffman (2007),
Becker (2010), Cardoso and Winter-Ebmer (2010), Spencer (2015). In
Vietnam, studies about gender gap in earnings there are Liu (2002), Pham and
Barry (2007) and so on. Interestingly, related to the solutions given by the
researchers in order to reduce gender income differences, there was the
relationship between female share in managers and gender wage gap.
Particularly, in the research of Hultin and Szulkin (2003) namely “Mechanisms
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Tran Thi Hieu

Master’s Thesis

VNP20-2015

of inequality unequal access to organizational power and the gender wage
gap”, the authors used the multilevel models in order to analyze the dataset of
Swedish which combined the information on a large number of private – sector

enterprises and all their employees. The finding showed that gender gap in
income in plants were wider while there were more male representations
among managers and supervisors in these enterprises and low relative wage of
female worker in plants in which there were no or only a few women in
managerial position. Another notable research, Hirsch’s paper (2013) is one of
these above studies, through the evidences from linked employer – employee
data for Germany, Hirsch found that gender income difference decreased by 0.5
log point when increased the female share in first level management by 10%
points. Therefore, follows the cornerstones of Hirsch’s research and applies for
the case of Vietnam in order to investigate the relationship of female share
managers and gender pay gap, this study is conducted particularly in small and
medium enterprises (SMEs) in Vietnam in the year of 2007.
1.2.

Research objective
The objective of the study is an analysis to find out whether or not the

women have an important role in the case of reducing the gender income
difference when they stand in the assembly line of managers in small and
medium plants in Viet Nam.
This research is also conducted to answer the main question that is
gender pay gap low in plants with more female managers?
And for the scope of study, it is undertaken in SMEs in Vietnam in the
year of 2007.

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Tran Thi Hieu

1.3.

Master’s Thesis

VNP20-2015

Structure of research
The research is organized as follows. In chapter one, problem statement

and objective research are presented. Chapter two provides concepts related to
the literature review, the definitions and the causes as well as the factors
impact on gender pay gap. Chapter three presents the overview of gender gap
in Vietnam. Chapter four presents data description, introduces methodology
method used, gives the estimated results. Finally, conclusion, policy
suggestions and limitations are highlighted in the last - chapter five.

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

CHAPTER 2: LITERATURE REVIEW
This chapter presents the overview of theory and discusses previous
studies relates to the research. The first part mentions about some definitions
of gender income difference. The second part discusses about the causes of
male – female income difference. The third part briefly presents the

measurement of gender gap in earnings. The fourth part talks about the
relationship of gender wage gap and social economic development. And the last
one indicates the impact on gender earning difference of female manager.
2.1. The definitions
2.1.1. Gender
Under Kim Thi Bui, director of Division of Workers’ Compensation
(DWC) about gender equality, gender is a sociological terminology that refers
to the roles, responsibilities and social relations between men and women.
Gender mentions the division of labor, division of resources and benefits
between men and women in a particular social context. Gender is formed
through the process of learning and education, heterogeneity, difference in
each country, each locality. It changes over time and accords to the process of
socio-economic development.
Benefits of gender are the benefit of women and men that when applied
they will change the actual division of labor by gender in the direction of
progress, contribution to enhance gender equality.
2.1.2. Gender equality
Follow the Convention on the Elimination of all forms of Discrimination
against women (CEDAW) 1978, gender equality was the status (living
conditions, living and working) in which women and men enjoyed the same

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

position, they had equal opportunities to access and use the resources to bring
benefit for themselves, discovered and developed the potential of each gender
to devote to the development of each country and got benefit from this
development.
Therefore, gender inequality and the term "discrimination against
women" means any distinction, exclusion or restriction based on gender which
affect or aim to do harm or disable the woman authentication, beneficiaries or
implementation of human rights and fundamental freedoms in the political,
economic, social, cultural, civil and other fields on the basis of equality of men
and women no matter how their marital status like.
2.1.3. Gender gap in earnings
In the field of labor, gender inequality presents in discrimination in
access to opportunities, the discrimination in employment and occupation as
well as discrimination in inheritance of employment achievements between
male workers and female workers. With a view to human-centered, gender
inequality in income refers to the relationship of income distribution and
gender. As a result, the gender gap in earnings is discrimination in income of
men and women workers, although they have the same feature of capabilities
and labor productivity as well (Del Río, Coral, Carlos Gradín, and Olga Cantó,
2011).
Under the final report of Anderson, Forth, Metcalf and Kirby (2001) to
Department for Education and Employment, there were a variety of theories
explaining the male – female income difference. Human capital theory
explained the gender gap in earnings through the differences in the innate
abilities of male and female or by differences in their education and experience,
which translated into differences in their productivity. Meanwhile, theories
regarding the social construction of skills which was supposed the historically
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Tran Thi Hieu

Master’s Thesis

VNP20-2015

inferior status of women may have led to the undervaluing of traditional
female skills, and this created a value system that penalized both men and
women for such skills. Furthermore, according to the theory of dual labor
market, there were two labor markets with differences in wages and
conditions. The primary labor market offered the high wages and good
conditions in order to get higher level of productivity, whereas the secondary
market had a lower level of pay and poor conditions to meet lower
productivity. Due to the restriction on women’s labor market options, they
might be concentrated on seeking jobs in the secondary market. And this
would contribute to the gender pay gap.
With the same findings, the organization for economic co-operation and
development (OECD) has defined the gender pay gap is the difference between
male and female earnings expressed as a percentage of male earnings.
Another definition is of the European Commission has found gender pay
gap as the average difference between men’s and women’s aggregate hourly
earnings.
In conclusion, a lot of papers have been conducted in the past and keep
going to the presents, but they have same point of view on the definition of
gender pay gap or the male – female difference in earnings.
2.2.

Cause of gender wage gap and the factors impact on gender wage

gap

2.2.1. Cause of gender wage gap
According to Anderson et al (2001), the authors provided the theories
such as “neo-classical labor market and theories incorporate a range of
individual and institutional factors which could explain the existence of gender
pay gap”. Human capital theory stated that the innate ability and skill were
dissimilar between women and men, this led to the productivity of women
were less than men and might explain the gender pay gap. Differences in choice
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Master’s Thesis

VNP20-2015

implied the women preferred the lower job to men and this also caused the
consistence of male – female income difference. Next, one of the causes of
gender pay gap was discrimination, and “four types of discrimination, there
were rational – legal, determinist, particularist and patronage” (Jewson and
Mason, 1986). The social value of skills, the women had been undervalued
about traditional skill due to the “historically inferior status” of them. Besides,
crowding “led to the excess supply of labor and along with the economic
domination, the wage in the labor market reduced” (Bergmann, 1971).
Moreover, female labor “faced with the larger degree of monopsony when
compared with male labor, and the wage rate for women would be lower”
(Manning, 1996). Furthermore, “the position of women in internal labor
market was weak and this made the disadvantage for them as well as caused
the gender earnings gap” (Kerr, 1950). In addition, “unionization and pay –
bargaining were also an important factor in which explained the gender

income difference, if women were less to be have their pay which determined
by collective bargaining and that was the cause of gender pay gap” (Anderson
et al, 2001). And there were some other factors which could explain the gap
income between women and men such as compensating differentials, employer
characteristics and secondary effects.
In accordance with the Fawcett Society organization, which is the United
Kingdom leading charity promoting gender equality and women’s rights at
home, at work and in public life, there are several main causes of gender gap in
earnings, such as the motherhood penalty, concentration in low wage sectors
and outright discrimination. With regard to the motherhood penalty, it is said
that due to childcare responsibility, women tend to choose part-time work
rather than full-time. While part-time jobs do not require high skill, also means
its employee is paid hourly wage lower than full-time job. This organization
also indicates that the average income of women earn 19.1% less than men
when doing the same part job time, whereas in work full time, this gap is
shortened about 9.4%. Once women choose to reduce working hours to spend
time with their children, they have sacrificed both current and future income.
Occupational discrimination or prejudices around the role of men and women
still exist. Job at cleaning, catering are often undertaken by women and paid
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Master’s Thesis

VNP20-2015

less than the construction work, engineering which are done by men. The
Fawcett Society organization also points out that 78% of the working in health,

social care, low-paid sectors, shall be in charge by women. Whereas men do
88% of job in STEM (Science, Technology, Engineering and Mathematics)
industries, where have high payment. Similar to above stereotypes, outright
discrimination against women remains in the workplace. Discrimination is
expressed through direct and indirect form. Direct discrimination happens
when with the same job, women get a lower wage than men. Meanwhile,
indirect discrimination showing men take a higher earning than women in a
job of equivalent value.
Concurred with Fawcett Society about causes of gender income
difference, the European Commission which is the EU's executive body and
represents the interests of the European Union as a whole (not the interests of
individual countries) supposes the source of male-female income difference
can be created by “direct discrimination, the undervaluing of women’s work,
segregation in the labor market, traditions and stereotypes, balancing work
and private life” under the brochure “Tackling the gender pay gap in the
European Union”. This brochure has been published by European Commission
in 2011. Because of the effectiveness of European Union and national
legislation, hence direct discrimination only explains a small part of gender
income difference. One of the main causes for women are paid less than men
when doing a job of equal value is the way women's competences are
valued compared to men's. Women often do the jobs requiring similar skills,
qualifications or experience, such as job in health, education, and public
administration where are poorly paid and undervalued. In details, based on the
research of the European Commission organization, there were 32% of female
workers participated in part time job, whereas this figure only accounted for
8% of male workers across the Europe. The reason why women employees

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

preferred part time job to full time job was that they had to take on the role of
family care.
Meanwhile, in Vietnam, following the research of Nguyet and Binh
(2007), the authors have pointed out the two groups which impact on gender
earnings gap, there are noneconomic and economic groups. The conceptions of
traditional gender inequality represents for noneconomic factor.

These

concepts about gender inequality and the social stereotypes are barriers to the
development of gender balance, gender equality relations. It was the feudal
conception from thousands of years about the position and value of women in
family and society. Under the feudal conception, men have the right to
participate in society, perform the function of production, and take
responsibility as well as manage society, while women look after the home and
children. Men who have full command and disposition all large things in the
family, whereas women execute, serve their husband and children. The women
are completely dependent on men, do not have any right to dispose of anything
even for themselves. Economic factor includes of characteristics of employee,
education’s worker, labor element, and geography. In details, characteristics of
workers consist of those elements related to physical and gender such as age,
marital status, health and per capita expenditure. Education is a very important
factor affecting the income of workers. Jobs requiring high qualifications, skills
complexity have higher wages than the simply jobs. Therefore, people can

access to higher education will have the opportunity to seek jobs with higher
incomes. Labor element includes professions, professional, work experience,
work organization. Typically, employee who works in the agricultural sector is
paid less than works in industry and service sector due to requirements and
qualifications of this sector are low. In the same occupations, the workers'
income depends on their expertise and work experience, since the complex
work give a better wage than an easy job. Moreover, employees with more

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

experiences usually do job faster and better than those with less experience,
hence they take higher wage.
2.2.2. The factors impact on gender wage gap
2.2.2.1. Non-economic factor
According to the World Bank (WB) in 2001, the concepts of gender
inequality or the stereotypes of society about gender are obstacles to the
development of gender balance, gender equality relationship between male
and female.
The perspectives from feudal time about the values, position of women
in family and society is very backward, but it is not easy to change, such as men
are entitled to participate in social work, stand out performing the function of
production, take responsible for social management, these things make men
respected by society. While women take on the role of reproduction and

community, care and regeneration of labor, such as homeworker, childcare.
Most of the works often do not generate income and they then completely
depend on men, nor have any right to dispose of anything even for themselves.
These are the causes that limit opportunities for women to access education,
career choices. These disadvantages prevent the improvement of the economic
status of women and thus create inequalities in income than men.
2.2.2.2. Economic factors
2.2.2.2.1. Characteristics of employee
Characteristics of worker include the factors related to the physical and
the gender, such as age, health, and marital status of employee. The empirical
evidences show that the income of an employee depends on the age of hers.
When the worker is young, she gets a low wage, after that the wage will be
increased along with the growth and accumulation of her human capital, and
mitigates when she is elderly. Moreover, the income of the young man worker
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Master’s Thesis

VNP20-2015

often increases faster than the young woman worker (Bojas, 2005). Next,
health is also one of the factors that make up the income gap between men and
women, the gender characteristics prescribe different conditions in men and
women, these differences lead to the division of work in which the
concentration of women in some careers is relatively few, this makes the wage
of the women do not avoid decline and thus cause wage differences between
men and women. Marital status has a similar impact to male workers and

female workers, when they get married and have children, due to increase of
the needs for their living, this makes the demand for work seeking in order to
earn extra incomes for both male and female labor. However, there is different
thing between male and female, women have to take on more responsibilities
to care for family and children, since these limit the opportunity to participate
in production and hence their income is lower than men's.
2.2.2.2.2. Education
Education is a very important factor affecting the income of workers.
Wage will be increased for the jobs requiring high qualifications and complex
skills. Boris (2005) presented the relationship between income and years of
schooling of workers through wage and education curve, pointed out
businesses were willing to pay the salary corresponding to each level of
education, expressed the relationship between salary and number of years of
schooling.
2.2.2.2.3. Employment
Employment factors comprise of industry, expertise, experience and
type of enterprise. Typically, the employee works in the agricultural sector is
paid less than other sectors because this sector does not require high skills and
qualifications from employees, they just have good physical in order to
undertake work well. Besides, in the same industry, workers' income also
depend on the expertise and experience of the themselves, because the
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Master’s Thesis

VNP20-2015

complex work is paid with higher wage than simple job and the worker has the
time to expose job longer they can complete the job faster and better than
those with less experience, so they then get higher wage.
Type of enterprise is also one of the factors that affect earnings between
men and women, the organizations are strictly governed by law, they will
compliance the policy of gender equality and therefore women labor will
receive income with more equality.
2.2.2.2.4. Geographic factor
Income is paid to employees with ensuring to cover their life and family.
Because the standards of living and expenditures are different in various
regions, so income is also different in diverse regions. Ordinary, labors in urban
area have higher income than rural areas in terms of the same nature and
complexity job.
2.3. Measurement of gender pay gap
The gender wage gap refers to the difference in income between female
and male worker (Pay Equity Commission, 2012). In addition, this gap is also
captured as a percentage (Statistics New Zealand, 2014) as below formula:

In which, pay for worker can be measured by hourly, weekly or monthly.
More details, when the purpose focuses on analyzing labor market and poverty
outcomes for numerous of men and women, monthly earnings are preferable.
Meanwhile, hourly earnings are favorable in the case comparison earnings of
smaller groups of workers in the same level of occupations or enterprises, with
the more appropriate. Usually, the gap measured by hours is smaller than by
over the longer time periods. This is because women have tendency to work
fewer hours for income than men do in most of the nations around the world.

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2.4. The impact on economic - social development of gender wage gap
Come after World Bank 2001 (WB), gender inequality in income is one of
the causes of poverty as well as a factor in a significant impediment to
economic development. Besides, the injustices that women suffer due to
inequality, it also has the disadvantage of their family. Income from labor is a
key source of renewable energy to women workers not only of themselves but
also the resources to ensure the quality of their family life. The status of gender
inequality in income leads to women are limited regenerative ability of labor,
restricted access to technology, education and training along with more
difficulties due to burden of workload families. Furthermore, lacking of
discretion in the family is the cause of the higher mortality rate of mothers and
infants, family health and less children schooling attendance, especially female
children.
Moreover, gender inequalities in income, reduces productivity in the
barracks and businesses, thereby, limits the potential for poverty reduction
and sustains economic progress. By obstructing the process of accumulation of
human capital as well as restricting access to productive resources, the right to
engage in production activities, leading to efficient allocation of resources in
society. Having lower income than men also causes limitation of creative
possibilities and motivation to improve and enhance the productivity of labor
in women.
In addition, gender equality, especially gender equality in income is
targeted toward of all nations. Gender equality in income enables to maintain a
progress of society, prosperity and sustainable development. It demonstrates

the

soundness,

efficiency

and

revolutionary

in

commitment

and

implementation of guidelines and policies of countries in order to implement
these objectives. In other words, gender inequality in incomes is one of the

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Master’s Thesis

VNP20-2015

reasons for weakening the ability to manage the state of a country, thereby
reducing the validity of the policy to develop.

Aside from, empirical researches typically Haas (2007) has conducted a
study on the relationship between economic development and gender pay gap
or the nexus of education attendance and wage inequality to the size of gender
gap in earnings as well. In Hass’s study, the author not only based on the theory
of both supply and demand and human capital but also applied the inverted – U
curve of Simon Kuznets. Kuznets’ inverted – U curve model which has the
hypothesis states that in a country the per capita income and the amount of
income have the relations with each other. Cross – sectional data has been
collected from the Unit Nations Human Development report in the year of
2005. Besides, a ratio of male - female earnings has been used as dependent
variable, meanwhile an independent variable was deputized by gross domestic
product (GDP) per capita. Although the research has some unavoidable
limitations, particular usages of the GDP per capital represented the economic
development, in other words, it was not all aspects of development that would
be and also, the role of human capital was not supported in this paper.
Nevertheless, the results of the OLS regression analysis have showed that the
size of male – female income difference was increasing when the economic
process developed, exception for high level of per capital income; wage
inequality and gender income difference had the positive relations.
2.5. The impact on male – female income difference of female manager
Under the social psychology of intergroup relations of Tajfel (1982),
individuals have tendency to prioritize members in their group than the
members in other groups. Following this theory, it might be stated that women
in managerial titles are likely to appreciate female workers than male workers,
this can result in the influence on the wage of their subordinates and make the
gender income difference narrower. There are varieties of studies about the
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Tran Thi Hieu

Master’s Thesis

VNP20-2015

impact of gender characteristics of manager on the gender gap in earnings,
such as research of Hultin and Szulkin (1999, 2003), Cohen and Huffman
(2007), Cardoso and Winter-Ebmer (2010), Shin (2012), Hirsch (2013), Hedija
(2015) and so on.
Hultin and Szulkin (1999) based on two interrelated datasets from the
Swedish Level of Living Survey and the Swedish Establishment Survey in the
year of 1991 in order to consider the effect of gender characteristics of
manager on the wage of subordinated worker in Sweden. The authors
estimated the wage function of male and female workers, whereas one of the
explanatory variables was the share of male on managers and supervisors, and
this function was estimated separately for private and public sectors. From
their research, they came up with a conclusion that the proportion of male
among managers and supervisors had a significantly negative effect on wage of
female. And this effect on private sector was clearly stronger than in public
sector.
The same result was conducted by Hultin and Szulkin in 2003, stated
that the larger males were participant in managers and supervisors then the
wider male – female income difference became. In this research, Hultin and
Szulkin used a matched employer – employee data, and the data covered
amount of private firms of Sweden in the year of 2003. Aside from this, multilevel model was applied to examine the influence of male share on managers
and supervisors on the gender wage gap as well. Hierarchical linear modeling
or multilevel modeling is one of the appropriate statistical methods which are
applied for nested data (Bryk and Raudenbush, 1992). This method is used for
some purposes such as prediction, data reduction and causal inference
(Gelman, 2012).

Another research related to this field – gender income difference, Cohen
and Huffman (2007) has used data from all large U.S private sector firms which
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Tran Thi Hieu

Master’s Thesis

VNP20-2015

were collected by the U.S. Equal employment opportunity commission (EEOC)
in 2002. Along with applying the hierarchical linear model, it allowed the
authors to decompose the total variances in wages into three component parts:
individuals, jobs and local industries. Cohen and Huffman examined the
influences of both the representation of women among managers and status
position of female manager on wages for men and women. Their findings
confirmed the gender earnings gap reduced when having more females among
managers, especially female managers hold high – status positions.
Cardoso and Winter-Ebmer (2010) also explored the influence of female
employers and gender segregation on wages in Portugal. Their research based
on a linked employer – employee dataset which annually collected by the
Ministry of employment in Portugal for the period from 1987 to 2000. These
data covered the population of private firms with wage earns in the
manufacturing and service industries. The results from running OLS regression
have been found out that female benefited from higher wages in female – led
firm than in male – led firm. More especially, the male – female income
difference reduced by 1.5% when female led. However, the findings also
showed that the wages of both female and male were lower when there was a
higher share of female in a firm.

Shin (2012) has used compensation data from 7,711 executives who
managed 831 U.S firms during the period from 1998 to 2005, in order to test
the hypothesis that there was a larger of female directors on the compensation
committee or board of directors, there was smaller gender gap in payment in
there. Moreover, another hypothesis assumed in this study was that when
female seated on top decision – maker, which meant they had a really
important role in the firm, this might contribute the career success of their
female subordinates. The benefits brought from such female leaders would
lead to narrow the male - female gap on earnings. However, this hypothesis has

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Tran Thi Hieu

Master’s Thesis

VNP20-2015

not been supported due to the lack of data. This hypothesis needed more
numbers and caculations. Beside, his research has applied the random – effect
regression with robust standard errors, whereas information of observations
was used to estimate the coefficiencies and so time–invariant variables. The
findings implied that creating greater positions has definitely effects on female
executives’ compensation when having more female leaders on the top
manager or on the board of directors, then the gender pay gap was clearly
reduced.
Next, in the study of Hirsch (2013), the author used the cross – sectional
model of linked employer – employee data in 2008. The dataset had been
collected by Institute for employment research and had been matched between

German plants and all employees who worked for these plants. The research
aimed to test whether the unexplained gender pay gap was smaller in plants
with higher share of females among managers or not. In this study, Hirsch
applied the Mincer wage regressions and added literatures in two dimensions,
controlled for segregation effects by adding job – cell effects as well as
investigated the impacts on gender earnings gap of first and second – level
managers. The findings had the same conclusion with some previous
researches regarding to gender gap in earnings. There was no doubt that the
unexplained male – female income difference was significantly lower in plants
with higher proportion of female among managers. Furthermore, the effect was
larger for the second – level manager than first – level manager because the
second – level managers were more likely to be involved with hiring, grouping,
and making promotion decision with their subordinates.
Another research, in the study of Hedija (2015), this study has explored
the influence of the gender characteristics in middle managerial position on the
wage of directly subordinates. Differing from the other studies, Hedija’ paper
has used the data linked superior – subordinate on the level of individual

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