Understanding the Gender Pay Gap: Whats Competition Got to Do with It?

A number of papers have recently argued that men and women have different attitudes andbehavioural responses to competition. Laboratory experiments suggest that these genderdifferences are very large but it is important to be able to map these findings into real worlddifferences. In this paper, we use performance pay as an indicator of competition in theworkplace and compare the gender gap in incidence of performance pay and earnings andwork effort under these contracts. Women are less likely to found in performance paycontracts but the gender gap is small. Furthermore, the effect of performance pay on earningsis modest and does not differ markedly by gender. Consequently the ability of these theoriesto explain the gender pay gap seems very limited.