Working Paper: NBER ID: w18511
Authors: Andreas Leibbrandt; John A. List
Abstract: One explanation advanced for the persistent gender pay differences in labor markets is that women avoid salary negotiations. By using a natural field experiment that randomizes nearly 2,500 job-seekers into jobs that vary important details of the labor contract, we are able to observe both the nature of sorting and the extent of salary negotiations. We observe interesting data patterns. For example, we find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate than women. However, when we explicitly mention the possibility that wages are negotiable, this difference disappears, and even tends to reverse. In terms of sorting, we find that men in contrast to women prefer job environments where the 'rules of wage determination' are ambiguous. This leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous.
Keywords: salary negotiations; gender differences; natural field experiment
JEL Codes: C93; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| explicit mention of negotiable wages (J31) | likelihood of negotiation initiation by women (C78) |
| ambiguous wage negotiations (J52) | gender gap in job applications (J16) |
| gender differences in negotiation outcomes (C78) | contract environment (K12) |