# I. Introduction

That women earn considerably less than men, even for the same job, is well established at the level of countries and industries.<sup>2</sup> The focus is now moving to the corporate world and individual firms. Large companies and institutions are looking within themselves and asking whether their diversity and inclusion policies are sufficient to guarantee pay equality: equality both in terms of ensuring that workers who perform similar jobs receive the same pay and that different people have an equal shot at different jobs.<sup>3</sup> In order to determine how the World Bank Group (WBG)—a large multilateral finance institution with a highly diverse workforce—fared in this context, we examined compensation at the institution, focusing on differences between men and women and between citizens of Part 1 and Part 2 countries. The additional emphasis on Part 1 and Part 2 countries is particular to the WBG and the classification roughly groups staff into those who are from higher (Part 1) and lower/middle-income countries (Part 2).<sup>4</sup> Together with the Human Resources group at the WBG we constructed a unique database called the “Human Resource Longitudinal Database” that contains information on all employees (excluding shortterm consultants) between 1987 and 2015.<sup>5</sup> Using this new database we were able to look at both pay differentials and job composition within the institution for those staff who were hired on the U.S. salary based plan, which includes all international hires, regardless of their duty station. To conduct this analysis, we defined and examined two characterizations of salary differences across employee subgroups at the WBG: The **aggregate gap** and the **career gap** .

We define the **aggregate gap** as the difference in mean salaries between men and women (or Part 1 and Part 2) employees at the WBG.<sup>6</sup> Frequently used in the literature on gender gaps in wages, the aggregate gap is sensitive to both occupational sorting and differences in salaries within occupations. In the context of the WBG, the aggregate gap will reflect, in part, the extent to which men and women are hired into

> 2 For recent reviews of the gender earnings gap in the United States, see for instance, Juhn and McCue (2017) and Blau and Kahn (2016). For international data and comparisons see the World Development Report (2012) on Gender Equality and Development. 3 Examples include a recent report by the London School of Economics Equity, Diversity and Inclusion Taskforce (2016) and - - - Facebook’s report on diversity, accessed on March 2017 at <u>https://newsroom.fb.com/news/2016/07/facebook diversity update positive-hiring-trends-show-progress. In addition, Gobillon et al. (2014) and Takao et al. (2013) focus on single large firms.</u>

> 4 Part 1 countries do not borrow from the WBG whereas Part 2 countries are eligible to borrow, a decision that was made by each country upon entering the WBG. As such, the country part classification roughly separates low and middle from high-income economies. This is necessarily a rough classification since a country’s economic status could have changed considerably over time. Appendix Table 1 in the report presents a list of Part 1 and Part 2 countries represented at The WBG.

> 5 Short-Term Consultants range from people working exclusively at the WBG to those on short contracts with permanent jobs at other institutions. Although there is considerable movement of staff from consultancy to staff contracts, the data on consultants are too limited for inclusion in our analysis.

> 6 Although compensation is a broader term, we focus on current salaries where we have complete data for all years and employees. A more complete analysis of compensation would integrate pension and benefits information with this longitudinal database. In addition, as is well known, analysis such as ours reflects one dimension of the overall job experience. Discrimination can be encountered and is experienced in multiple ways, but this remains outside the scope of our current analysis.

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