“Around the world, men occupy the highest ranks of society. They rise to become CEOs more often than women, they are more likely to reach the highest positions in government, and they are paid more than women in the labor market.”
Negotiation is supposed to be essential to understanding gender wage gap. Men negotiate more than women do, and the effect of this on lifelong earnings is enormous.
Career enhancement programs for women frequently include sessions to develop negotiation skills. But with Leibbrandt and Lists’s work, the picture become murkier. They study negotiations that happen when people get a new job, and their results are surprising.
A natural field experiment
Instead of using a simulation or a survey to study differences between men’s and women’s negotiating patterns, Leibbrandt and List actually placed ads for positions as administrative assistants and then studied about 2400 people who expressed interest.
When jobs were described to applicants, they were told one of two things about the hourly wage. Either they were told that the pay was a specific amount per hour. Or they were told that the pay was a specific amount, but that negotiation was possible. Negotiation was either implicit and therefore ambiguous, or it was explicitly invited and therefore an overt option in the process.
Men and women responded differently to these two situations. When there was no mention of negotiation, men tried anyway; they were more likely than women to ask for a higher wage even though there was no indication that they could.
However, when the job announcement itself explicitly raised the possibility of negotiation, then the women were actually more likely than the men to ask for an increase in the advertised wage. More likely! To those of us who have read about this topic before, that is a surprising result.
When men don’t apply
Applying for a job in this study involved two steps. First, potential applicants would respond to an announcement and receive more information about the position. On the basis of the additional information, they would decide whether or not to apply. Hence, we can see how the implicit or explicit treatment of negotiation correlates with a potential applicant’s decision to go further in the process.
For women, there is little difference in the two situations: when negotiation was mentioned as an option, slightly more women carried through on an application than when it wasn’t.
The men, however, showed a greater distinction. When negotiation was explicit, fewer men completed the application process, compared with when negotiation was not mentioned. In other words, men dropped out of the process more when negotiation was mentioned as an option. They preferred to apply for jobs when there was no mention of negotiation in the advertisement. In this way, the results support earlier research showing that men prefer ambiguous negotiation situations rather than clearly stipulated rules.
Impersonal application environments
Contact between the applicants and the potential employers in this study happened via the internet, and the authors postulate that the impersonality of the interactions may serve to reduce gender differences.
Our tentative conclusion is that in environments in which negotiations are impersonal, gender differences in negotiation play a lesser role than when negotiations are face to face. A tentative implication is that as modern economies evolve, and a greater number of transactions are completed impersonally, gender differences in bargaining might play a lesser role in wage setting.
2 new steps forward
This research can start to lay the foundation for tools to be more fair, to act more gender-blind when we need to, and to rectify the well-documented wage gap between men and women. Group differences are enhanced when a wage is presented in a job advertisement as fixed and non-negotiable, and they are enhanced when negotiations happen face-to-face.
If we want to undermine group differences — as we must — we get good ideas from this article. First, negotiation should be mentioned as an option in the job announcement, unless it genuinely is impossible — but then it really must be genuinely impossible. Secondly, if evidence mounts that group differences are reduced by avoiding face-to-face negotiations, then employers can contribute to gender equality by using impersonal means of interaction such as email.
Many questions remain, of course. Are there differences between the negotiating patterns of men and women applying to be administrative assistants and those who apply to be researchers? Are there differences between the way we negotiate our starting salary and the way we negotiate when we subsequently get a promotion?
Even though there is much more work to do, we can find encouragement in the work of Leibbrandt and List, who show that it is possible to reduce the wage gap between men and women. And it’s not even that hard.
If you want to learn or think more about gender equality and gender balance, check out my 6 steps to gender equality and other essays about how universities can get more women to the top and why they should, available as a pdf for free on the front page of this blog, or in Kindle format for a song at amazon.com.