The shift to stock-based compensation and gender inequality in wealth in the United States

Abstract

This study identifies a novel explanation for gender inequality in wealth in the USA; namely, the important role of stock-based compensation. Since the financialization of the US economy, American firms increasingly offered workers compensation based in part on company stock, and 23 per cent of private-sector employees now have stock-based compensation. Analysis of the Survey of Consumer Finances data suggests that stock-based compensation promotes greater wealth accumulation than regular wages, but its wealth benefits are higher among men than women, especially at the top of the wealth distribution. Also, this study finds that men, on average, receive more stock-based compensation than women, and the gender gap is explained by job characteristics and sociodemographic attributes. Finally, analysis of the National Bureau of Economic Research survey of employees with stock-based compensation shows that men are more likely to utilize its wealth-building potential than women, thus contributing to gender inequality in wealth.