The Glass Ceiling Puzzle, Legal Institutions, and the Shadow Economy Feminist Economics

Feminist Economics

Bruno Ćorić

The low number of women in senior management is often used as one of the main indicators of gender discrimination in the labor market. The stance widely held in the economics, sociology, psychology, and management literature is that the major source of the underrepresentation of women at top management positions stems from prejudices toward women’s social roles, rights, and abilities. Since the mid 1980s, the literature has used the glass ceiling metaphor to describe the invisible barrier of prejudice and discrimination that prevents women from reaching higher positions in the corporate hierarchy.

The recent international data on the percentage of women in senior management challenge this explanation. The international data show that most developing countries stand better with respect to the percent of women in senior management than the Western democracies. Bruno Ćorić’s study establishes and analyzes this puzzling result.

Methodology. Ćorić uses country-level data to investigate the differences in the share of women in senior management across countries. The data on women in management are provided by the Grant Thornton International Business Reports for forty-five countries between 2004 and 2014. The data are first employed to rank countries in the sample according to the percentage of women in senior management. In the second step, Ćorić uses cross-country regressions to analyze the differences in the share of women in senior management across countries and to test proposed explanations for the puzzling ranking of the countries in the sample.

Main findings. Ćorić’s study shows that women are, on average, substantially more represented at higher managerial positions in countries in which prejudice and discrimination against women are greater. The percentage of women is, on average, substantially larger in countries where women have fewer economic and political rights; where gender inequality is larger; and where more persons believe that men make better business executives, men have more rights to a job, and university education is more important for boys. Ćorić puts forward two possible explanations for these puzzling findings: the weak functioning of the legal system and the large size of the shadow economy. These explanations suggest that the larger percentage of women in senior management in developing countries could be a result of the higher participation of women members of owners’ families in senior management and a result of a larger number of women taking high positions in the formal corporate hierarchy without having real leadership power. The author provides empirical evidence that is consistent with these explanations. Particularly, the results show that when the quality of the legal system and the size of the shadow economy are taken into account, the puzzlingly positive cross-country relationship between prejudice and discrimination against women and share of women in senior management fades away.

Research implications. Given the widely held stance in the literature that the small number of women at higher positions in corporate hierarchies is related to the glass ceiling, it is appealing to interpret international data on the share of women in senior management as an indicator of lower gender inequality in developing countries than in Western democracies. Ćorić’s research suggests that the higher number of women in senior management in developing countries does not indicate better social positions of women in these societies, but is rather a result of specific business conditions in which the lower quality of the legal system and the larger share of the shadow economy promote appointments of women at higher positions in corporate hierarchies.

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