Female Career Success: Institutions, Path Dependence and Psychology

This paper identifies the pertinent institutions governing the structure of payoffs with regard to female career progression. Drawing on recent insights in behavioral economics, we hypothesize that interactions between psychological mechanisms and the institutional setup may be important determinants of cross-country differences in the level and evolution of female representation on executive positions in the business sector. We test this proposition informally by exploring whether it can be used to account for some of the observed differences between Sweden and the US in this respect. Our normative conclusion is that institutional reforms aimed at increasing female representation should take into account the role of psychological mechanisms in determining career choices and how these mechanisms are affected by relevant institutions such as the level of personal taxes, rules for parental leave, child care and wage-setting arrangements. Throughout the strong path dependence in career choice and career progression is emphasized.