Managing the Gender Wage Gap-How Female Managers Influence the Gender Wage Gap among Workers

Previous research shows that female managers narrow the gender wage gap (GWG) among workers but does not disentangle two general underlying mechanisms. First, female managers might use their organizational power to change organizational practices and make organizations more gender-equal. Second, female workers might benefit from interacting with a female manager, e.g. through homophily and mentoring. To disentangle these two mechanisms, I distinguish between female managers at the first management level, which is responsible mainly for organizational practices, and at the second management level, which mainly interacts with workers. Additionally, I consider practices enhancing gender equality, such as work-life balance practices. Using German linked employer-employee panel data and a firm fixed-effects regression, I find that female first-level managers slightly narrow the GWG. This influence is not affected by the consideration of organizational practices. Hence, female first-level managers do not affect workers' by changing organizational practices. In contrast, female second-level managers considerably narrow the GWG among workers. In summary, female managers substantially reduce the GWG among workers, and this effect works via the manager-worker interaction mechanism. Hence, increasing the share of female second-level managers might close the GWG.