Gender Differences in Negotiations and Labor Market Outcomes

Motivated by evidence that individuals are systematically misinformed about the prevalence of negotiations and the expected efficacy of negotiations (and that these information gaps differ by gender), the paper presented in this Mannheim Applied Seminar conducted a randomized experiment with the bachelor’s graduating cohorts of 2018 and 2019 of Boston University’s Questrom School of Business. Specifically, a subset of individuals at the end of their junior year - prior to the job search process - were provided with information about the relative difference in negotiation rates by gender along with the efficacy rate of negotiation reported by past graduates. Comparing pre- and post- information beliefs about negotiation likelihood at the time of treatment, the authors find that the information increased the stated likelihood of negotiating any monetary aspect of students’ first job by 9.1pp (16%). While the treatment focused on monetary aspects, the information appears to have also nudged students’ intentions of negotiating non-monetary aspects of the job, with both males and females increasing their stated likelihood of negotiating non-monetary aspects by 7.1pp (15%). Despite the gendered nature of the information treatment, they find that males and females revised their prior likelihoods by the same amount after receiving the information.

After following-up with the treated cohorts post-graduation, they find economically and statistically significant impacts on actual labor market outcomes. The treatment: (1) increased the likelihood of negotiating non-monetary aspects of students’ first jobs by 9pp for both males and females; (2) increased the likelihood that students were satisfied with their current job by 10pp (14%) for females and 1pp for males; and (3) increased the likelihood treated males negotiated some monetary aspect of their job offer by 10pp (50%) compared to control males. Surprisingly, treated females were no more likely to negotiate than their control female peers. However, both groups of females negotiated at significantly higher rates than females in previous cohorts. They present several pieces of evidence that suggest that this is due, in part, to gender-specific treatment spillovers.

Further analysis suggests that the mechanism behind the observed treatment effects operates through modifying beliefs, rather than saliency. While the authors' estimates for annual earnings are imprecise, point estimates suggest that the treatment group had a $3,500 (41%) lower gender earnings gap compared to the previous cohort. Further, the treatment is unlikely to have increased the earnings gap (p=0.18).