The gender pay gap at the top floor: A multilevel analysis of Spanish listed companies

The gender pay gap, including at the top management level, is a socially relevant issue; however, it remains controversial. This study explores the distribution of pay by gender for executive directors of Spanish listed companies over the period 2012 to 2021. The analysis is based on multilevel regression. Three-level models with a fixed slope for gender show that female directors face an average 45% pay penalty relative to their male peers after controlling for time-varying individual and board/firm variables, time-invariant firm characteristics, and year of observation. A three-level model including all control variables and a random slope for gender shows that the gender pay penalty varies significantly across boards/firms (from 18% to 78%), with an average value of 46%. This finding suggests that unobservable heterogeneity among firms is a primary source of the observed gender pay gap.