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When Male CEOs Have Kids, Employees Make Less Money

 

If your boss is having his first child, you’d better hope it’s a girl.

That’s the takeaway from a new study published in Administrative Science Quarterly, which examines how employees’ wages change immediately after a male chief executive officer has a child. Economics and business professors from Denmark’s Aalborg University, Columbia Business School, and the University of Maryland’s Smith School of Business studied the salaries of 1.2 million people across 10,600 companies in Denmark and found that when a male CEO has a child, his employees’ wages decrease. It’s not a large decline—just 0.2 percent, adjusted for inflation—but when spread across an entire company, that small amount of money (about $100 per employee) adds up.
At the same time, the CEO pads his own pocket with a wage increase of 4.9 percent. “He has a kid, he thinks immediately, ‘I want more money for my family,’” explains Cristian Dezsö, assistant professor at University of Maryland’s Smith School of Business and co-author of the study. “But it comes at the expense of the employees.”
The study was inspired by a 1991 paper by sociologist Rebecca Warner that linked male politicians’ stances on so-called women’s issues with whether or not they had a daughter. (Not surprisingly, she found that those with daughters were more likely to hold feminist views). “Given my interest in business, when I read that paper I immediately thought, Well, does a daughter influence a CEO’s stance on gender relations in the workplace?” Dezsö says. The answer appears to be yes.
Dezsö and his colleagues focused on Danish companies because of the ease with which they could acquire salary data. “In Denmark, people are issued national ID numbers much like the Social Security numbers in the U.S, and they link that ID to pretty much everything,” he explains. “If I know your number, I can see the company you work for, how much money you make, who is your spouse, your kids, and so on and so forth.”
Dezsö discovered that employees’ wages fall farther if the CEO has a son than if he has a daughter—and they do so at different rates for women than for men. If a chief executive’s firstborn child is a son, female employees’ wages go down by .2 percent and men’s drop by .5 percent. Dezsö is quick to point out that this doesn’t mean women suddenly make more than men—just that the gender pay gap, which exists even in Denmark, narrows slightly. The reason for this might be the executive’s newfound respect for motherhood. “Whenever a CEO has his first kid, he is probably married, and so he sees how hard it is to be a mother … by extension he might sympathize more with women. So the salaries of female employees don’t go down as much as men’s,” he says. When the CEO has a daughter, he’s even more sympathetic—and women’s wages actually go up.
This phenomenon occurs only when executives have their first child. With two or more children, employee’s wages decrease no matter who they are. “Think of it as negative and positive forces working against each other—the CEO wants more money for himself, but he also feels more generous to his employees,” explains Dezsö. “With the first child, positive forces win. With the second or third child, the negative forces win and he just takes more money for himself.”
We were curious to know if these findings hold true for American CEOs as well. (According to Dezsö, the study couldn’t be replicated in the U.S. because privacy laws make it too difficult to procure the relevant information.) While he doesn’t know for sure, he has a hunch. Denmark ranks seventh in the world for gender equality, according to the 2012 Global Gender Gap report, “which means that most people there already hold liberal views of women’s rights,” he says. The U.S., meanwhile, is ranked 22—just above Mozambique. In a more biased society, the economic impact might be even more pronounced.
“If I were to get very cocky, I’d say that what we found in Denmark is a very conservative change in CEOs’ outlooks and maybe we’d find bigger effects in the U.S.” But he doesn’t know for sure. “Until we can collect the right kind of data in the U.S.,” he says, “it cannot be more than speculation.”

Kenyans abroad send back $1 billion in 2012

Dollar inflows from Kenyans working in the United States and Canada were the main contributors to record remittances for the east African country last year, which cross the $1 billion mark.

Data from the Central Bank of Kenya (CBK) shows that Kenyans abroad sent $1.17 billion in 2012, a 31 per cent increase on 2011.

"The sustained increase resulted to a 31.4 per cent growth in remittance inflows from $891.1 million in 2011 to $1.2 billion in the full year of 2012, an indication of resilience in remittance inflows to Kenya despite the weak global economy,” CBK said in a statement.

The North American region, whose economy is still recovering, accounted for nearly half of these inflows, followed by Europe which shares similar economic woes.

Diaspora remittances, along with tourism, tea and horticulture are among Kenya's leading foreign exchange earners.

Meanwhile deposits into money transfer systems offered by Kenyan mobile phone companies rose by 75.33 per cent in the nine months to September last year, hitting the highest amount since the industry regulator started tracking the numbers.

The Communications Commission of Kenya (CCK) Monday said phone users deposited Sh205 billion ($2.38 billion) into mobile money transfer systems of the country's four operators, compared to Sh117.36 billion ($1.36 billion) deposited over a similar period in 2011.

Easier services

The growth was partly attributed to an increase in the number of agents working for the telcos, making it easier to access services.

CCK said that the number of agents countrywide stood at 54,409 as at the end of September last year compared to 44,922 at the end of September 2011.

The ease of using mobile money applications had also helped to grow the value of money and increased the use of the mobile money systems.

“This growth indicates that the mobile money transfer service has become a key payments and transaction tool, mainly due to its easy use of applications, convenience and low-cost value propositions,” said CCK in the report.

The CCK data, however, does not capture total transfers and all mobile money operators which include those that do not offer voice services such as Mobikash and Tangaza.

This data is tracked by CBK and in the nine months to September, the banking regulator’s data shows that total transfers rose by 34.76 per cent to Sh1.117.98 trillion ($1.37 trillion) compared to Sh829.62 billion transferred as at the end of September 2011.

CCK said that the number of mobile money transfer subscriptions rose marginally by 4.9 per cent to 19.31 million as at September last year from 18.4 million over similar period in 2011.

www.businessdailyafrica.com

South Sudan's President Kiir fires 34 military chiefs and a governor

South Sudan President Salva Kiir.  PHOTO | AFP

South Sudanese President Salva Kiir has reshuffled the army’s command, firing 11 top army officers, including deputies to the Chief of the General Staff, and 23 more senior commanders.

Mr Kiir has also fired Lakes State governor Chol Tong Mayay, a democratically elected governor in a state engulfed in bitter cattle raiding and deadly sectional fighting.

In sacking the governor, the president invoked the presidential powers enshrined in the Transitional Constitution of South Sudan 2011, which allows the president to sack an elected governor if that state is engulfed in a major crisis that threatens national security.

Mr Chol’s sacking comes days after sectional fighting between two feuding communities in the state killed more than 49 people in two consecutive days of armed confrontation that threatened to spill over to the state capital, Rumbek, last week.

The reshuffle in the army also saw 10 senior officers promoted to the rank of lieutenant-generals, some of whom were immediately deployed in three sectors bordering neighbouring Sudan.

Mr Kiir also appointed six new deputies to the Chief of General Staff James Hoth Mai.

The leader made the sweeping changes in four separate decrees broadcast on the state radio on Tuesday.

Zimbabwe VP John Nkomo is buried

President Robert Mugabe.  PHOTO | FILE

Zimbabwe President Robert Mugabe on Monday called for peace when the country holds its elections later in the year.

Speaking at the burial of Vice-President John Nkomo he told the thousands of mourners at a national shrine for former fighters in Zimbabwe’s liberation of the importance of holding peaceful elections.

“Peace begins with me Robert Mugabe, peace begins with all of us,” he said. “Let’s carry this exaltation of peace to all our political parties and hold elections that are peaceful.”

A general election is expected in the second half of this year amid regional efforts to prevent another violent poll in Zimbabwe.

Mr Nkomo succumbed to cancer last Thursday at the age of 78.

He was chairman of a peace and reconciliation forum formed after Zimbabwe’s 2008 elections that were marred by political violence.

Among the mourners were the vice-presidents of Tanzania, Botswana and South Africa.

He was appointed the country's second vice-president by President Mugabe in 2009.

He became the fourth vice president to die in office since Zimbabwe’s independence in 1980.

He was seen as loyal to the veteran ruler and was never associated with factions that are reportedly jostling for the 88-year-old leader’s position.