View this month's President's Pick article for free in November: http://pubsonline.informs.org/stoken/default+domain/president-Nov15/full/10.1287/mnsc.2014.1994
Do Women Avoid Salary Negotiations? Evidence from a Large-Scale Natural Field Experiment
Andreas Leibbrandt John A. List
Management Science (2015), 61(9): 2016-2024. http://dx.doi.org/10.1287/mnsc.2014.1994
This Management Science paper, comparing negotiating behavior of men versus women, is timely, since we are now at the INFORMS Annual Meeting in Philadelphia. In prior studies, women have been found to negotiate less than men, and to obtain lower salaries. In this study, Andreas Leibbrandt and John A. List set up a natural field experiment, by placing real job advertisements so they could find out how men and women responded to ads stating the salary is negotiable or stating a posted salary. This allowed observation of 1) who applied to a negotiable salary job or a fixed posted salary ad, and 2) whether an applicant initiated salary negotiations.
We learn from this study that when the job ad says the salary is negotiable, differences between men and women disappear. So, I want all academic job candidates to know that negotiation is expected. This week, those seeking academic jobs will be having conference interviews in Philadelphia. Once jobs are offered, deans (especially in business schools) will expect candidates (both male and female) to attempt to negotiate on compensation and workload. Schools will differ on what, if anything, is negotiable, including base salary, summer support, teaching load and schedules, relocation costs, housing allowance, start-up funds for computers or labs, start date, etc.. There are many subtle issues at play when women do or don’t negotiate, as Linda Babcock and co-authors have explored in the past (Babcock L, Laschever S (2003) Women Don’t Ask: Negotiation and the Gender Divide (Princeton University Press, Princeton, NJ); Babcock L, Gelfand M, Small D, Stayn H (2006) Gender differences in the propensity to initiate negotiations. In Crèmer DD, Zeelenberg M, Murnighan JK, eds. Social Psychology and Economics (Lawrence Erlbaum Associates, Mahwah, NJ), 239–259). Babcock even got a Girl Scout badge created for teaching girls about negotiation (http://blog.girlscouts.org/2011/02/npr-teaching-negotiation-skills-to.html). Maybe we could get even more Boy Scout or Girl Scout badges for operations research and analytics tools!
-Have you (or your student/trainee) negotiated job terms recently?
-Was it a successful negotiation?
-How can you tell if a negotiation is successful?
Abstract
One explanation advanced for the persistent gender pay differences in labor markets is that women avoid salary negotiations. 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 extent of salary negotiations and the nature of sorting. We find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate for a higher wage, whereas women are more likely to signal their willingness to work for a lower wage. However, when we explicitly mention the possibility that wages are negotiable, these differences disappear completely. 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.
Keywords: negotiation; field experiment; gender; labor market; sorting
L. Robin Keller
http://www.merage.uci.edu/go/Keller; personal site: http://faculty.sites.uci.edu/lrkeller/
Professor, Operations & Decision Technologies
The Paul Merage School of Business
University of California, Irvine
INFORMS President, 2015, president@mail.informs.org