When Women Don’t Negotiate

The unwillingness of women to negotiate their salaries is often blamed for the persistent male-female wage gap.  A new paper (abstractpdf) from Freakonomics favorite John List (and coauthor Andreas Leibbrandt) uses a  field experiment to explore the issue:

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.

List and Leibbrandt conclude that: “[B]y merely adding the information that the wage is ‘negotiable’ we successfully reduced the gender gap in job applications by approximately 45%. Thus, details of the contract environment have important effects on the gender gap, and with such knowledge public officials can design laws to take advantage of such effects.”

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COMMENTS: 20


  1. Travis says:

    I normally am very hostile to any sort of legislation of pay equality, because most gender gap statistics are nonsense – and the perception that they are fueled by bigotry or sexism is silly as well.

    This, however, addresses only equality of opportunity, and a law requiring to state whether wage is negotiable or not wouldn’t really be overly burdensome.

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    • SlickR says:

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      • Sarah says:

        I’m glad to have read this because it will encourage me to be more proactive in salary negotiation, whether or not it is explicitly stated.

        But I don’t think this would lead to employers hiring more men. More likely employers would look at their budget when hiring employees, expect similar negotiations with prospective male and female employees, and cap top salaries for both sexes in respect to their bottom line depending less on the employees assertiveness .

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      • stev says:

        If this was true, then wouldn’t they be hiring more women now?

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  2. Cory says:

    “Thus, details of the contract environment have important effects on the gender gap, and with such knowledge public officials can design laws to take advantage of such effects.” — Wait. Are they proposing that we require businesses to state explicitly whether it will allow a candidate to negotiate for a better wage.

    The problem is that you’d get into all sorts of nuance. What if the wage varies on experience or education? Is that “negotiable” because you can highlight certain successes? And what if there is a certain progression in the job and you can ask to be put on a faster track? Is that negotiable? What about fringe benefits? What happens if a business finds a candidate it really likes, but then needs to meet another company’s offer? Does that mean that it violated the law by not announcing the job terms were negotiable?

    The government doesn’t need to poke its nose into every negotiation just because some people are more prone to negotiate than others, and this just opens the door for a whole slew of lawsuits, second-guessing, and attempts to get around such a silly proposition.

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    • Jason says:

      Doesn’t seem like a lot of nuance to me. It is negotiable (because you may have to adjust for experience, education, competing offers, etc.) or it is not negotiable. If you are willing to make those adjustments because your preferred candidate asked, then you should be clear about that. The study indicates that this would help close the gender gap. Who would be hurt by this?

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      • SlickR says:

        They are not omnipresent and may not plan on a negotiable salary, but some really great person comes along with huge expertise and lots of success and they may not want to pass this opportunity and start negotiating with him/her. By mindlessly forcing companies to put these burdensome regulations you pretty much lower competition, business flexibility and actually it will have the opposite effect of what you are trying to achieve. This would mean businesses just hire more men, as when they hear the situation is reversed when they put that the job salary is negotiable and woman on average gain more through it, they would just hire men, thus creating more problems for woman, in fact they may outright put “only men” in their job advertisement and not go through all the burdensome regulation.

        How about we educate woman and woman educate themselves that they need to negotiate their salaries even if it isn’t listed and not get the government involved in wiping everyone’s asses?

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  3. Elliot says:

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  4. mfw13 says:

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    • Michael Robinson says:

      The abstract seems to disagree with this.

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    • Sophie says:

      So then why would women be just as good, and if not better than me, when negiotiable salary is mentioned?

      Having been in the position of accepting a salary I later found to be negiotiable I believe it is more to do with women’s slightly higher risk aversion. I did not want to risk not getting the job by questioning the salary.

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      • dufusrightsadvocate says:

        “Risk”

        I think he covered that. Men are greater risk takers… Generally to their own detriment, but.. still.

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    • OS says:

      You cannot claim things like that by example. Unlike yours, my wife is a better negotiator than me. So what?

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  5. Enter your name... says:

    I’d like to know whether men and women who negotiated actually got the same wages, or if one gender benefited more from their negotiations. This study doesn’t seem to be big enough to address that.

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  6. Andy says:

    I read a post similar to this about a year ago when my wife was applying for a new job. After reading it, I told her to counter offer for $7,000 more a year no matter what her job offers. They came back with $6,000 more than their original offer. We looked at it as a $6,000/year instant raise.

    Bottom line: You MUST negotiate your salary or you will receive the lowest possible wage.

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  7. Nick Armstrong says:

    When I have a daughter, I will teach her that *everything* is negotiable. I mentioned this exact research (or an earlier iteration of it) in my book Psychotic Resumes when talking about how to close the gender wage gap.

    Not only does it come down to just being confident in your own skillset, but something as stupidly simple as asking if they have any more left in the till for this position. There’s almost always a range, unless it’s a very small company with no HR budget.

    Everything is negotiable. Always ask, there’s nothing to lose (if you do it right!)

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  8. Scott Lovingood says:

    Everything is negotiable. I believe men tend to be more willing to take risk and to ask. Aggressive is another term that could come to mind. I think most men would see every salary as subject to negotiation.

    Many women would not see it the same way (though my Ukrainian sister in law certainly sees everything as negotiable). Women tend to be less aggressive and more willing to compromise.

    Why pass a law? Aren’t they entering into a free market agreement? They don’t have to work for the proposed salary. They can ask to negotiate.

    Sounds like more education is needed and training on how to get a job than a law.

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  9. Jesse Crouse says:

    Keep working and fighting for more money. Maybe your employers will let you see the sun some day.

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  10. Nate says:

    I have managed high tech teams with above average salaries in the past and can 100% confirm that women on average tend to not negotiate or be appeased with their salaries more than men.

    Once after taking a director level position I was shocked to find one particular software engineer that had been with the company making such a paltry salary – yet she was completely satisfied and content and had never asked for more money. To give you an idea of the disparity, I gave her a 125% raise the first year I was there and told her that I felt she could get more with another company… and she did just that the following year.

    I don’t attribute this to her gender, there was at least two other males that were also vastly underpaid because they’d been at the same company so long and comfortable, they were unaware of market rates.

    If you do not ask, often you do not get. Pay attention to the market and if you are marketable, you need to be asking and negotiating!

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  11. Rob Herbison says:

    Instead of drafting public policy to adress this issue wouldn’t a P.R. campaign be a more prudent measure. Women who are aware that their salaries are negotiable would probably behave like the women who were explicitly told their wages are negotiable. I can see an article on this blog in six months on the unintended consequences of such a public policy.

    Rob

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