In 2014, Denmark is ranked as number 4 on the overall Gender Gap Index. Nevertheless the country is ranked as low as 72 for representation among legislators, senior officials and managers.
Many of us think Scandinavian countries as great examples regarding the gender gap. In 2010 though, Denmark had only 7% of female CEOs in companies with more than 50 employees. And the bigger the company, the fewer female CEO. This figures are even more surprising as Danish women entered the labor market more than 50 years ago. The country is also know for its family-friendly policies implemented decades ago. Women are now even more educated than men and represent a majority at universities. Finally, there’s been a increasing focus in the management literature on the advantages of diversity management.
This study presents new empirical evidence on that paradox. Analyzing a large sample from 1997 to 2007 allow the researchers to dig deeper into the relation between the promotion of female top executives and childbirths, maternal leave, periods out of the labor market, the careers of spouses, and the gender composition of the management board and board of directors.
In 2007, 4.6 % of the males and 3.6 % of the females in the group of potential top executives were promoted into a VP position while for promotions from VP positions into CEO positions, the same figures were respectively 4.4 % and 2.7 %.
The first hypothesis tested was whether these gender gaps are explained by women’s lack of formal observed or unobserved time-invariant competencies or by some firms being constantly more reluctant to hire or promote women into top executive positions. They are not.
For the second hypothesis the researchers dig deeper in the gender-specific role of a number of factors. They had historical information on maternity, paternity and parental leave periods for the individuals (and their spouses) included in the sample. They find out that:
- Time out of the labor market and child-related decisions are important factors;
- Children seem to benefit the promotion rates of fathers, but have no effect on mothers’ promotion chances;
- if the fathers take up parental leave, they are strongly punished on career prospects and promotions while the individual woman is not
- Women who give birth at a relatively young age (21 to 24) seem to have higher promotion chances from VP into CEO
Though most of these family-related variables are clearly important, they still not explain the overall gender gap discussed here.
The researchers then analyzed the link between the female-led companies and gender gap. They conclude that these firms are either not different from other firms or in some cases hire fewer women into top positions, compared to other companies. It fits with other empirical evidence for Denmark saying that female managers may have more gender-stereotype « beliefs » than male managers on female competences and the requirements for management positions.
The final hypothesis is that the unexplained gender gap is partly due to overall institutional mechanisms in the Danish society. These « welfare state effects » may affect preferences and norms concerning female career choices both on the demand and supply sides in a very general way. Many women may not find it very attractive to become CEOs because they have to give up too much to fill a CEO position compared to the alternative as being a VP or having a lower position which is more easily combined with having more kids and full take-up of maternity leave and other family-friendly schemes. Note that this hypothesis hasn’t been statistically tested.
Why are So Few Females Promoted into CEO and Vice President Positions? Danish Empirical Evidence, 1997–2007
Nina Smith, Valdemar Smith, Mette Verner - IZA September 2011