The share of female managers in finance has grown but their earnings are still lagging far behind male managers

In the beginning of the 1990’s, the share of women in managerial positions in the finance sector in Finland was only 15 percent, whereas by the 2010’s the share of female managers had risen to almost 50 percent. However, this is not reflected in their earnings, which are lagging far behind the male managers. 

– The earnings of female managers in finance are on average 15 percent lower than male managers’, says Saara Vaahtoniemi who will publicly defend her doctoral dissertation on Friday, September 30, at the University of Vaasa. 

Occupational segregation is a major challenge for equal pay in the financial sector 

The finance sector in Finland pays about 20 percent higher wages to their employees than other service sectors. The finance wage premium is smaller in Finland than for instance in the United States or the United Kingdom. Even though women are in majority in finance, men have the highest earnings. This is largely explained by the differences in  educational backgrounds between men and women, which shows as occupational segregation within finance. The majority of women in finance work at the clerical level.  

Occupational segregation between men and women can also be seen in managerial positions.  

– Women are working as managers of marketing teams, whereas men are more often managers of investment teams, where the wages are significantly higher than in marketing, says Vaahtoniemi. 

Higher education is positively associated with getting promoted to a managerial position for both men and women. However, the wage increases associated with promotions are larger for men than they are for women, at all hierarchy levels. Men are overrepresented in promotions from clerical to expert positions because the share of men at clerical jobs is very small.  

Shareholder banks pay higher wages than cooperative and savings banks 

Vaahtoniemi’s dissertation documents wage differences between different bank types. Profit maximizing shareholder banks pay higher wages to their employees than cooperative and savings banks do. On the other hand, in cooperative and savings banks the wage differences between workers are small.  

Bonuses are paid more often to managers in shareholder banks, while in cooperative and savings banks bonus payments are more equally distributed to workers at managerial, expert, and clerical levels.  

In her dissertation, Vaahtoniemi used wage data from the Confederation of Finnish Industries from 1990 to 2014.  

Doctoral dissertation 

Vaahtoniemi, Saara (2022) Money, Merits and Gender: Essays on wage differentials. Acta Wasaensia 490. Väitöskirja / Doctoral dissertation. Vaasan yliopisto / University of Vaasa. 

Public defence 

The public examination of M.Sc. Saara Vaahtoniemi’s doctoral dissertation in Economics "Money, Merits and Gender: Essays on wage differentials" will be held on Friday 30.9.2022  at the University of Vaasa.  Docent Antti Kauhanen (ETLA) will act as an opponent and Professor Panu Kalmi as a custos. The defence will be held in Finnish.