Differences in competition and the gender wage gap: Experimental evidence from Tanzanian factories

Gender gaps in labor market outcomes are well documented empirically across a variety of contexts and time periods. Tanzania is no exception: while 79% of women participate in the labor force, only 10% of women are employed in the formal sector, and there is a 35% gender wage gap. We focus on one potential driver of the gender wage gap, gender differences in competitiveness, which has important implications for workplace policies to improve gender pay equality. In particular we ask (i) how do different compensation schemes affect the gender wage gap, that is do different incentives motivate men and women differently; and (ii) how does the experience of industrial work more broadly affect gender differences in competitiveness. We study these questions in partnership with one of the largest manufacturing employers in Tanzania, as the industrial sector is becoming an increasingly important formal sector employer of women. Using the existing incentive tools employed by the factory, we randomly vary the relative intensity of individual performance bonuses, team-level performance bonuses, and opportunities for promotion to isolate their effect on gender gaps in employee outcomes. On the extensive margin, we compare factory applicants who were randomly offered a job to those who were not over a two year period to ask how exposure to factory work affects taste for competition as well as other gender norms.