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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  1. 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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  2. 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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  3. 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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