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 (abstract; pdf) 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.”