Do Women Avoid Salary Negotiations?
Ambiguity about the possibility of wage negotiations may discourage women from applying to some positions and contribute to gender wage gaps.
Past studies have demonstrated that women earn approximately three-quarters of what men earn and that women represent only 2.5 percent of the highest-paid positions at U.S. firms. Researchers have long sought to identify the source of these wage gaps, which might be differences in human capital, workplace practices such as maternal-leave policies, general discrimination, and differences in competitiveness. Some evidence also suggests that men and women differ in the way that they negotiate for wages, and that women are less likely to engage in salary negotiations at all.
In Do Women Avoid Salary Negotiations? Evidence from a Large Scale Natural Field Experiment (NBER Working Paper No. 18511), co-authors Andreas Leibbrandt and John List report on an extensive nine-city field study which involved advertisements for actual administrative-assistant jobs. They find that in responding to these ads, men are more apt to initiate wage negotiations when there is no explicit statement at the outset that wages are negotiable. Men also generally prefer positions for which the "rules of wage determination" are left ambiguous. However, women become more aggressive in negotiating wages when the advertisement explicitly states that wages are negotiable; this erases and even reverses the gender differences.
This experiment had four job categories for applicants: a gender-neutral one that explicitly said wages were negotiable and a gender-neutral one that was ambiguous about whether wages were negotiable, both for administrative help in fundraising, and a "masculine" one that explicitly said wages were negotiable and a "masculine" one that was ambiguous about whether wages were negotiable, both for administrative duties in areas heavily skewed toward sports, such as basketball, football, and NASCAR. The advertisements were posted on Internet job boards between November 2011 and February 2012 in Atlanta, Dallas, Denver, Houston, Los Angeles, Portland, San Francisco, San Diego, and Washington D.C. Nearly 2,500 job seekers responded to the initial postings. Each interested person was asked to submit a resume and to answer a questionnaire before they could proceed with the application process. Although the ads were either ambiguous or explicit about whether wages were open to negotiations, the posted wage (usually $17.60/hour) was identical across job ads and slightly higher than the median wage for comparable jobs in most of the cities. Some of the responses initiated by job seekers included: "The wage of $17.60/hr. does not really meet my expectations. My desired wage would be closer to $20/hr" or "My desired wage is $21/hr, but I am open to negotiation." From these inquiries, the authors could determine how men and women approached job openings under different circumstances.
Men tended to apply more often for the "masculine" jobs, but the authors were able to reduce this gender gap in applications by 45 percent merely by adding information that wages were "negotiable." They conclude that ambiguity about the possibility of wage negotiations may discourage women from applying to some positions and contribute to gender wage gaps.
Because the job-application process for this study was conducted largely through "impersonal" emails, the authors' findings appear to be consistent with past research suggesting that women are at least as likely to negotiate as men when face-to-face communication with other parties is limited. As the number of jobs that are filled in such impersonal ways increases, women may benefit by negotiating higher wages, thus narrowing the gender wage gap.