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Olenka Kacperczyk

London Business School

The Gender Pay Gap in Startup Employment

Date: Friday, November 8, 2024
Time: 10:30 AM -12:00 PM
Location: Armstrong building, Room 375

All are cordially invited to attend.

Abstract:

We examine the gender pay gap in startups, uncovering a disparity in financial returns between men and women employed in startup roles. We propose that relative to their male counterparts, female employees experience lower financial returns from startup employment than from employment in incumbent firms. We theorize that this 鈥渆ntrepreneurial employment penalty鈥� arises from the inherently ambiguous and less transparent nature of startup compensation. Negative stereotypes about women鈥檚 workplace commitment lead to a discount in women鈥檚 equity-based pay, which is characterized by higher ambiguity and less transparency than traditional salaries. Drawing on matched employer鈥� employee data from Finland, we find notable gender disparities in equity allocation and the resulting long-term financial returns from startups. Furthermore, our analysis reveals that the gender pay gap in equity is exacerbated for women with childcare responsibilities but is reduced when startups are required to increase ownership transparency or face financial constraints.