Posted on September 19, 2023 by Rebekah Alegria
It is no secret that a gender pay gap exists in industries across the globe. No matter where you go and what the role is, the likelihood that you would discover a woman earning less than a man in a similar position is inevitable. Natasha Burns , professor of finance at the Carlos Alvarez College of Business, has built her research career exploring how differences in people’s choices and values affect various market outcomes, including the gender pay gap.
Burns along with fellow researchers sought to explore why and how pay inequalities came to be. By performing a cross-country sample of top executives’ compensation, the researchers were able to understand how culture is used in explaining the gender wage gap.
“Finances or money incentivize choices, of course. Cultural attitudes or values can also influence choices, especially at the margin where there is more room for subjectivity. For example, while a basic pay range for a company position might be publicly known, there will be some variation based on ‘a little bit of this and a little bit of that. People weigh these factors subjectively, and their cultural values can inform us as to why,” stated Burns, who has served as a visiting senior economist at the Securities and Exchange Commission.
By studying a sample of highly- skilled executives from publicly traded companies, Burns was able to compare top executives with similar skills in the same position, while also considering company culture characteristics.
The findings in the study proved the researchers’ theory about the gender pay gap to be true, but also showed that the compensation gap is both country and executive-role specific.
“Compensation is useful to explore since it involves subjectivity and can be measured. Because cultural values vary across countries, we can explore how differences in these values affect various market outcomes, including the differences in pay for men and women for the same role. Further, cultural values are persistent, and I expect their effects also to be persistent, so it’s important to understand their effects on choices,” said Burns, who has taught at UTSA since 2007.
Based on the 2022 study, the pay gap was discovered to be more prevalent in larger, more religious populations whose cultures accept a greater number of anti-women, corruption, and intolerant ideologies. In contrast, societies that embrace positive views on women’s education, women in the workplace and value of hard work and individualism proved to have a smaller gender pay gap.
Uncovering and evaluating why the gender pay gap exists, and how it can be remedied not only benefits women, but also the companies and societies in which they work. The findings from this study can help organizations develop a better understanding of how cultural norms are related to a compensation gender gap (and overall compensation) in the highest levels of the labor market.
When asked what she hopes her research will accomplish in the world of business, Burns referenced the late Adam Smith, the father of modern economics, whose work is frequently referenced when talking about free markets and capitalism.
“According to Smith, markets involve people interacting to trade, and they function better if we treat each other fairly and justly. I am interested in what influences people to behave fairly or unfairly to others. If we understand the incentives for choices, we can address them.”
She will continue to focus her future research on the cultural and societal influences on managers’ choices that affect transactions and markets.
Burns’ academic interests include how incentives, and the structure of incentives affect behavior., “Cultural values affect how people react to incentives. I also enjoy learning, analyzing, and bringing together different ideas. The reason we ask a research question is because we don’t know the answer. To answer that question, we must learn a lot,” said Burns, who earned her Ph.D. from The Ohio State University.
— Rebekah Alegria
