An alternative approach for analysing the gender wage gap in managerial positions: a stochastic latent class model

This paper examines the wage gap among workers holding managerial positions in Spain taking into account firm and individual characteristics. We use a Latent Class-Stochastic Frontier model to analyse the wage gap between male and female managers in Spain. This methodology is particularly flexible, as it allows evaluating the probability of an individual belonging to a particular group, even when sample separation information is not available. We identify three sources of gender wage differentials: differences in human capital, differences in the probability of reaching the high wage class (associated with a glass ceiling), and differences in the ability to reach the potential wage. Our results show that the different probabilities of reaching the high-wage class are the main determinant of the gender wage differential. Specifically, we found that most of the gender wage gap is attributed to the lower probability of women belonging to the high wage class, which is consistent with the existence of a glass ceiling. Thus, this analysis takes a step forward in the literature by explaining both the differences between classes and within each class. To our knowledge, this is the first study that conducts an analysis of wage differences using this approach.