Connections on Wall Street

• Author: Lily Fang
• Position: an Associate Professor of Finance at INSEAD.­

Since the 1980s, women have outnumbered men among college graduates in OECD countries. Today, in the United States, even in law and medical schools, women account for about half of the class. Since 2010, women have been the majority of the U.S. workforce. Judging from these trends, women’s advancement in education, labor participation, and economic empowerment is one of the past few decades’ most significant social changes.Â

But this progress hides some stubborn facts. In particular, the ranks of women business leaders remain woefully thin, and women still face a glass ceiling in the corporate world.Â

Thin at the top

Just look at the statistics for the “C-suite”—top corporate jobs such as chief executive officer (CEO), chief operating officer (COO), and chief financial officer (CFO). In 2011, only 8 percent of CFOs and 1.5 percent of CEOs of large U.S. corporations were women, compared with 3 percent and 0.5 percent, respectively, in 1994. Yes, this is a huge increase over that period. But the percentages have not increased much over the past five years, and the low absolute figures contrast sharply with women’s advancement in education and labor force participation.Â

The stubbornly low female presence in the C-suite reflects women’s broader lack of progress in business. Even though women pulled ahead of men in entering medicine and law, female enrollment in master of business administration (MBA) programs has been stagnant: it has hovered around 35 percent for more than a decade and shows no sign of increasing. According to industry-matched compensation data compiled by Bloomberg Businessweek, female MBA graduates earned a smaller percentage of their male counterparts’ salary in 2012 than in 2002. Women lost ground on pay in 8 of the 11 most popular industries: the average pay gap widened from just under 3 percent to almost 7 percent over the decade (Damast, 2013).Â

There are many explanations for gender differentials in the business world. The wage gap reflects in part the different types of jobs men and women do, even in the same industry: client-based work involving travel versus office-bound back-end work, for example. But the glaring difference between the number of women who graduate from college (and business school) and the number who eventually make it to the top of the business world reveals the glass ceiling women still face: women are promoted far less frequently than their male classmates.Â

Why is the business world still...