Should women ask for higher wages ?

While the median gender wage gap has decreased over the past 20 years in OECD countries, it remains high : it has indeed evolved from 17.7% in 2000 to 12.8% in 2018 on average. Well documented in the empirical economic literature, the persistent gender wage gap can be explained by several factors. Researchers such as L. Kiessling, P. Pinger, P. Seegers and J. Bergerhoff have, for example, looked at the role played by differences in wage expectations before entering the labor market. In a study conducted on students in Germany for example, these researchers found that at the beginning of their careers, female students expected to earn 86% of the salary that male students thought they could get.

Thus, in recent years, women have been increasingly urged to make higher salary demands. Salary negotiation preparation guides and workshops for women have grown, and in her best-selling book "Lean In: Women, Work, and the Will to Lead" Facebook COO Sheryl Sandberg calls on women to be more demanding during salary negotiations. 

Could demands for a raise from women lead to an increase in their pay and thus reduce pay inequality? In a research article, economist Nina Roussille gives a positive answer to this question and suggests that women are not penalized when they make salary demands as high as men.

Using an online recruitment platform

In order to understand the impact of salary demands on salary inequality, Nina Roussille analyzes data from the online recruitment platform hired.com, which specializes in high-paying technology-related jobs. On this recruitment platform, candidates must provide a resume and indicate their "ask salary". A company interested in a candidate on the platform makes a "bid salary" before an interview takes place. If the candidate is hired after the interview, the platform records the "final salary" agreed upon by the company and the candidate.

Data used

The researcher uses a database of 123,383 candidate profiles, 43,509 job offers from 6,755 companies based in 21 cities in the United States. Candidates have an average of 11 years of experience and a high level of education: 82% have at least a Bachelor's degree and 35% have at least a Master's degree. Female candidates registered on the platform have more education than male candidates: 41% of them have a Master's degree (compared to 34% of men). 

Due to confidentiality reasons (resulting from the research contract signed with hired.com), the years for which the data was used could not be communicated.

Research results

Nina Roussille found that, for the same resume, women registered on the platform asked for salaries 3.3% lower than men. This difference in salary demands, which is statistically significant, represents an average of $4,032 per year. 

The researcher also analyzes the impact of the salary demands expressed by the candidates on the platform on the differences between the "salary offer" (proposed by the company before the interview, based on the resume provided) and the "final salary offer". The researcher finds that the differences in salary demands between men and women explain all (100%) the salary offer gaps and that women are not discriminated against at the extensive margin. 

Finally, Nina Roussille finds that women are not penalized when they make wage demands similar to those of men. The researcher reaches this conclusion by analyzing the impact of a change in the platform's modality in 2008 on companies' salary offers. Before this change, candidates indicated their desired salary in a free field on the platform form, but from 2008 onwards, the field is pre-filled with the median salary offer generally proposed to a similar candidate on the platform. Based on computer engineers in San Francisco, the author finds that the change in the platform has led to an elimination of gender gaps in salary applications and salary offers. In addition, women have not seen a decrease in the number of offers received by companies as a result of the change. Nina Roussille's work therefore suggests that women are not penalized for asking for wages as high as men's. This result should encourage women to make higher wage demands.

Contributions of the article

First, Nina Roussille's article develops the concept of "ask salary", which is not widely used in the existing literature on gender pay gaps. While the concept of "realized wages" is widely developed and measured in the literature, gender wage expectation gaps have only recently begun to be explored (in this article for instance). The concept of "ask salary" developed in Nina Roussille's article seems particularly relevant to the literature on gender pay inequalities since it is directly involved in wage negotiations (which is not the case for gender gaps in wage expectations).

Second, the data used in the article seem particularly relevant in that the information is based on a large sample (123,383 candidate profiles) and does not have any missing values due to non-response. 

Finally, the article focuses on both the demand and supply sides of the labor market, whereas most of the available research often focuses on only one side.