The three essays in this dissertation address two prominent labour market and human
resource management issues in contemporary China: gender pay differentials; and payperformance
relationship in managerial compensation. Using three unique data sets, this
dissertation examines three areas: the managerial gender pay gap in top corporate jobs; the
effect of state ownership and managerial power on CEO compensation; and the gender pay
compensation differentials in base pay, performance pay and total pay.
The first chapter uses a unique data set from a survey of firms and managers in China
to examine the managerial gender earnings gap in China. The results show that female
managers receive much lower pay than male managers. A larger portion of the gender
earnings gap can be attributable to firm-level characteristics than individual characteristics.
Female managers tend to have fewer firm-level characteristics that are associated with higher
pay, and when they do, they tend to receive a smaller pay premium for those characteristics.
The second chapter uses a data set constructed for the study based on corporate
annual reports. Results indicate that CEO compensation is positively related to the financial
performance of the firms in both state controlled and non-state controlled firms. The
compensation level, after controlling for various pay-determining factors, is higher in nonstate
controlled firms and for CEOs with greater managerial power. The strength of the payperformance
link is stronger in non-state owned firms compared to state owned firms (as
indicated by the interaction between performance and state ownership). When state
controlled firms and non-state controlled firms are analyzed separately, the pay-performance
link is significantly weaker for CEOs with greater managerial power in non-state controlled iii
firms, and weaker but not significantly so in state controlled firms (as indicated by the
interaction terms between firm performance and managerial power variables). Whether
CEOs are recruited from outside of the firm or from inside of the firm does not have an effect
on either the CEO compensation level or the strength of the pay-performance link.
The third chapter examines whether and how the gender pay gap varies across
different pay schemes: base pay, performance pay and total pay. The results show that
women receive about three-quarters of male pay for each of the dimensions of base pay,
performance pay and total pay, before adjusting for the effect of different pay determining
factors. Decomposition analysis of the different components of pay (base pay, performance
pay and “other” pay) indicate that males earn about 30% more than females in total pay with
the gender gap in performance pay (35%) and in “other” forms of pay (28%) both being
greater than the gap in base pay (25.5%). The unexplained or potential discriminatory
component, however, is smaller for performance pay and “other” forms of pay compared to
base pay, suggesting that there is not more discriminatory discretion in the awarding of
performance pay and the “other” forms of pay compared to base pay.