How your CEO's new baby could affect your pay

HRM 14 Jan 2013

The gender of your CEO’s newborn could determine how much you get paid, says new research.

Three American academics presented this finding at the annual American Economic Association’s annual meeting, reported the Wall Street Journal.

Their research revealed that if a male CEO had a baby, employees’ salaries decreased by 0.2%, a potential loss of 100 dollars a year. If the baby was a boy, the decrease was steeper at 0.4%. A possible reason could be the need to save resources and protect his family as a preventive measure against financial crisis, the authors stated in the study.

If the first born was a girl, however, employees’ wages were more likely to rise (0.6% for males, and 1.1% for females), the report suggested.

One possible explanation is that having children changes a male CEO’s outlook – and particularly his perspective on women. “Previous research shows men’s esteem for their wives often rises when they become mothers and this shift may nudge male executives to also view their female employees as more competent,” the Wall Street Journal reported.

The paper, written by Aalborg University Economics professor Michael Dahl, University of Maryland Smith School of Business professor Cristian Dezso and Columbia Business School professor David Gaddis Ross, involved more than 1,600 births to 18,000 male CEOs at 10,655 private companies in Denmark between 1996 and 2006.

A male CEO's salary also increases after the birth of a child – male CEO salaries rose 6.3% after the birth of a son and 3.5% after the birth of a daughter, the research said.



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