Attitudes towards economic risk and the gender pay gap

This paper examines the links between gender differences in attitudes towards economic risk and the gender pay gap. Consistent with the literature on the socio-economic determinants of attitudes towards economic risk, it shows that females are much more risk averse than males. It then extends this research to show that workers with more favorable attitudes towards risk are associated with higher earnings, and that gender differences in attitudes towards economic risk can account for a small, though important, part of the standardized gender pay gap.

Graphical AbstractThe variations in attitudes towards economic risk depicted in the bar chart are related to earnings, and each one-point increase in the measure of risk is shown to be associated with 3.4% higher earnings among males, and 2.4% higher earnings among females. The gender differences in attitudes towards economic risk are found to account for just three percentage points of the approximately 24 percentage points gender pay gap.Figure optionsDownload full-size imageDownload as PowerPoint slideResearch Highlights► Attitudes towards economic risk are moderately heritable. ► Females are more risk averse than males. ► Favorable attitudes towards economic risk are associated with higher earnings. ► Different attitudes towards economic risk are a minor part of the gender pay gap.