Rent Sharing and the Gender Bargaining Gap: Evidence from the Banking Sector

We use the removal of public bank guarantees in Germany as a quasi-natural experiment to estimate the gender bargaining power gap. Using comprehensive wage data from the universe of banking employees, combined with bank-level financial information, we find that women have approximately two-thirds of the bargaining power of men. Our model-based analysis suggests that this gender bargaining gap alone accounts for 13 to 25 percent of the observed gender wage gap in the sector. These findings highlight an important driver of gender inequality: Changes in firm profitability can reduce the gender wage gap, even without improvements in structural gender equality. This effect has significant implications for high-rent, high-inequality industries such as finance, where rent-sharing mechanisms favor male employees.