Gender pay gap in the microfinance industry: a global perspective

We use a database composed of 2,545 Microfinance Institutions (MFIs) worldwide for the period 2008-18 to explore the effect of a larger share of women's workforce on both staff wages and overall monetary compensation within MFIs. MFIs are different from other industries, as they are traditionally women-centered, i.e. they have a significant share of women employees at every level of the corporate hierarchy and mostly serve women clients. Applying both traditional estimation methodology and techniques aimed at accounting for possible endogeneity among the main variables, we find that a higher proportion of women on staff significantly increases the average expense per worker (which also includes the incentive components of remuneration) while the effects are considerably smoothed (or not significant) on the base salary. This leads us to conclude that, unlike what is seen in other sectors of the economy, MFIs do not pay women less. Yet, significant positive effects of women in the workforce, especially on average overall monetary compensation, suggest that women are likely to exploit their superior skills and/or gender affinity advantages with customers of the same gender to enhance MFIs' efficiency and profitability, thereby achieving higher incentive compensation, mostly in the form of bonuses and other benefits.