In both their 2023 paper and CGD blog on pay gaps at the World Bank Group (WBG), Das and Joubert make several valuable contributions. The first contribution is the construction of a longitudinal database of personnel records to follow individual career paths over time. While the authors are not allowed to share the data (understandably given its sensitive nature), the paper demonstrates the usefulness of this type of record-based information and shows other firms and organizations what can be done with that kind of data.

By itself, this is valuable. For example, I have been collaborating with a large private firm that is trying to reduce gender disparities within its organization, but that has focused mainly on aggregate measures of the gender gap and narrow ‘equal pay for equal jobs’ indicators. They have extensive personnel records that could be pulled together into a single longitudinal database. Das and Joubert’s paper may convince them that it is worth doing!

Second, the authors make a huge contribution in terms of methodology. The availability of longitudinal data from personnel records offered a unique opportunity for trying to disentangle the drivers of gender gaps inside the WBG over time. But when I first discussed this work several years ago with the authors, it was not obvious how to do it. The dynamic decomposition method for wages is a very clever solution that allows them to break down the gender gap into the relative contributions of differences in entry salaries, differences in salary increases over time, composition of hires by grade, and legacy effects. Although it looks complex on paper, the concepts behind the decomposition are quite intuitive and easy to explain to a broad audience (as demonstrated by the accompanying blog). And while Das and Joubert) have chosen to apply it to the gender wage gap, it could easily be applied to other dimensions of wage inequality (like ethnicity, race, or disability). This approach can be useful to other researchers as well as to organizations or firms that are concerned about disparities in their hiring and pay practices.

Third, the results are remarkably interesting. The paper shows that most of the aggregate gender pay gap at the WBG comes from the composition by grade effects, e.g., from the fact that historically women were hired into different positions/grades than men. Entry-level pay differences and differences in salary increases and promotion rates play small roles in the evolution of the gender gap (mainly because they are simply not that large to begin with). The patterns are similar to what you would observe in the broader labor market, where skills and occupational segregation explain a large part of the gender pay differences. So, it seems that the same complex forces that drive gender gaps in the broader labor market are at play in the internal labor market of firms and organizations.

However, a single firm or organization may be able to act to redress these gaps more easily and quickly than society at large as it has direct control over its hiring and pay policies. And this seems to have been the case for the WBG. By 2015, the WBG had succeeded in largely eliminating gender-based differences in pay at entry and in composition in the technical grades. If there are no other reversals, this will automatically close the aggregate gender wage gap, even if it will take time for the changes to work themselves through the pipeline. When Das and Joubert compare women and men who were hired at the same grade, the gender pay gap over a career is relatively modest, at 5 percent. As the analysis covers a lengthy period, it presumably includes periods of family formation and is therefore great news.

The WBG thus deserves recognition for the progress it has made towards rewarding men and women equally and for not penalizing motherhood, at least in terms of compensation as analyzed in Das and Joubert. This is in sharp contrast to a growing literature that finds that much of the gender wage-gap now starts with motherhood in high-income countries. The WBG also deserves some praise for its willingness to conduct this analysis and make it public. I would like to see other large organizations and firms do the same.

So, does this mean that the WBG should stop worrying about gender disparities? Clearly, not.

The paper only includes data from WBG Washington-based headquarters and not from its field offices. We would perhaps see a quite different pattern of progress if the data from field offices were included. In practice, this would be exceedingly difficult to do given the multiplicity of exchange rates, but perhaps other, less ambitious analyses on gender gaps in the field offices could be done to arrive at a more complete picture. Also, the paper focuses on full-time permanent employees, excluding those who work on temporary contracts. There are important disparities in pay and working conditions between permanent and temporary workers that may or may not have a gender dimension (I suspect they might). Moreover, the paper uses data only until 2015 and promotions now seem to require overseas postings, which may be harder for women than men. Finally, as the paper also notes, pay is only one dimension of gender equality. Other, equally important ones, have nothing to do with pay. There are also non-gender dimensions of pay inequality, for example, inequality due to ethnicity, race, and disability among others, that also deserve attention.

Personal observations on how the WBG moved towards greater gender equality in compensation

While the WBG deserves recognition for getting to a more equal place, it is worth remembering that the institution’s commitment to greater gender equality did not come overnight. In fact, it was a slow and painful process. As the data in Das and Joubert’s paper show, in 1990 (when I first joined the WBG) only a fraction of technical GF hires were women, and an even smaller percentage of management was female. Personally, I remember the Bank of that time as a traditional male-dominated, male-led institution with few women in positions of decision-making (and few role models for a young woman economist like me to look up to). Gender equality was not considered important to development (nor to the institution’s mandate). In fact, inequality more broadly was not on the institution’s radar screen either. But by 2018, when I left the institution, the World Bank felt like a vastly different place. I had worked with three consecutive women managing directors. More than 40% of senior managers were women. Many of the strongest, most influential technical and intellectual leaders were also women. Beyond the numbers, it had become an institution that understood that gender equality matters for development and matters for poverty reduction and equity.

So, what changed? I have not done any rigorous analysis on this, but my perception is that the change was driven by a combination of shifting social norms in society at large, sharply increased competition for talent with other organizations/firms, and a rapidly increasing pool of qualified female applicants — also, by the work and efforts of the WBGs growing body of female staff, especially those who made it to the leadership ranks.

But also, and this links directly to the relevance of Das and Joubert’s paper, the change was helped by the increasing body of knowledge that suggested gender equality mattered to productivity and development. New research and knowledge were critical to convincing the WBG leadership and staff of the importance of integrating a gender lens into its programs and its hiring and pay policies. The first analytical report on the importance of gender equality to development at the WBG came out in 2000/2001 with the work on Engendering Development, by Beth King and Andrew Mason. In parallel to, or shortly after the publication of that important report, the WB human resources team engaged in a review of its own internal gender pay gaps, focusing especially on pay gaps at entry and discrimination against women in hiring into the technical grades. They also analyzed the performance evaluation processes for technical staff, looking at issues such as the differential criteria and differences in language in performance feedback for women and men. These diverse pieces of analysis led to changes in policies for setting entry-level offers and spurred a greater effort to hire women at technical grades (especially GF).

Then in 2010/2011, under President Robert Zoellick’s leadership, the WBG took further action on two important fronts. First, in 2012 it decided to focus its annual, high-visibility World Development Report (WDR) on gender equality and why it matters for development. The WDR on Gender Equality and Development changed the framework through which the institution was thinking of supporting gender equality. It put the spotlight on economic opportunities, agency and endowments, and the interactions between them. And made the point that both formal rules and informal norms (including about the distribution of the care burden in the home) mattered greatly for gender outcomes. Twelve years on, the Report is still extensively cited and has shaped the gender strategies not just of the World Bank, but of the UN and other multilateral institutions.

Second, the WBG decided to take more concrete and visible measures to increase the presence of women in leadership positions–including ensuring women candidates were on the shortlist for higher-level positions, and aggressively hiring external candidates for higher grades (GI+). These measures led to a sharp increase in the number of women in senior leadership positions starting in 2010 ). This increase reversed in 2014, when the reorganization of the WBG into Global Practices expanded the number of senior management positions, which ironically resulted in the growth of female representation among senior management returning to its trend level. But the staff’s attitudes and expectations have changed. They expect fairness in pay and promotion, and parity in leadership. There will be little room for complacency and little tolerance for backtracking.