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How Will California’s Gender Quotas Impact Women?

January 5, 2019 in Economics

By Vanessa Brown Calder

Vanessa Brown Calder

This year California will begin implementing a new policy that
requires companies to fill around 40 percent of corporate board
positions with female directors. Governor Jerry Brown signed the
gender quota law into effect last year, and it will phase in over
the next three years. By 2021, the policy will require companies to
appoint two female directors if the company has five directors and
three female directors if the corporation has six or more.

While unprecedented in the United States, California’s policy is
not original. The proposal follows in the footsteps of various
other European countries including Norway, France, Italy, Germany,
and Spain that have passed similar legislation in recent years. And
given that some policies have been around for more than a decade
already, California voters and policymakers would be wise to
consider the outcomes of existing reforms and set expectations
accordingly.

The existing evidence
suggests it will not be what voters and policymakers
expected.

Californians should start by reviewing Norway’s
experience: Norway was the first country to require gender quotas
for corporate boards in 2003, and the country set quotas at around
the same level as California (40 percent of corporate board
directors must be female under Norwegian law). Norway’s
policy dissolves companies in the event of noncompliance, whereas
California is set to fine companies between $100-$300K if they
don’t comply.

Norway and California’s reform also shares a common
objective. As California law describes it, “More women
directors serving on boards of directors of publicly held
corporations will … improve opportunities for women in the
workplace.” Likewise, the primary objective of Norway’s
reform was to increase female representation in corporate
leadership positions and reduce other gender disparities within
corporations. The idea is that if women are discriminated against
or lack a corporate network necessary to advance within a company,
then gender quotas might help overcome that.

But findings from a study published this week in The Review
of Economic Studies
challenges the idea that women’s
opportunities in the workplace can be improved through gender
quotas.

The study’s authors find that although Norway’s
gender quotas increased the nominal level of women on corporate
boards and benefited elite women selected for board director roles,
the impact mostly ended there. Specifically, Norway’s quotas
did not increase female representation in corporate leadership
positions overall, did not reduce gender pay gaps for highly
qualified women, and did not benefit highly qualified women that
were not selected for board roles. In a survey that was part of the
study, young women also had not adjusted marital or childbearing
plans because of the reform, which is important since marriage and
childbearing have an impact on long-term female work …read more

Source: OP-EDS