Negotiating Your Way Out of the Binder

Although female representation in the labor market has grown over the last few decades, the “glass ceiling” remains a potent barrier for many women. Most recently, presidential candidate Mitt Romney’s reference to “binders full of women” highlighted the ongoing debate about why men continue to dominate the workforce in both lifetime earnings and positions of power. Many researchers have theorized that the gap is driven by factors such as discrimination, the need for maternity leave, and differences in overall competitiveness and skills. However, in a new study, “Do Women Avoid Salary Negotiations? Evidence from a Large Scale Natural Field Experiment,” authors Andreas Leibbrandt and John A. List attempt to identify how differences in the salary negotiation behaviors of women and men may ultimately impact their respective bottom lines.

As part of their study, Leibbrandt and List first crafted an experiment in which eighteen job ads were posted in several metropolitan areas. The authors examined two factors related to job negotiations: the likelihood of individuals to respond to gender-based job postings and the likelihood of individuals to engage in salary negotiations.

To understand the likelihood of women and men applying to gender-based job postings, the authors crafted two separate job postings. In one posting, the advertised position was gender-neutral and sought administrative help with fundraising. In the other, the ad was purposefully masculine, seeking administrative help in a sports environment.

To understand the likelihood of women and men to engage in negotiations over salary, the authors also varied language in the job posting. In one posting, the authors explicitly stated that wages were negotiable, while making no mention of negotiability in the other.

Overall, nearly 2,500 individuals displayed interest in the ads, of which approximately 36 percent ultimately applied. Women were overwhelmingly more likely to signal interest for the gender-neutral role, representing 78.7 percent of the interested population. For the explicitly masculine role, women represented only 55 percent of the interested population.

The gender gap was also apparent in how women and men responded to mention of the ability to negotiate over salary. Men appeared to value the ambiguity of salary negotiability and applied more often in this setting at a rate of 46.6 percent, as compared to 31.9 percent for women. Conversely, men were less likely to apply to roles when salary negotiations were explicitly mentioned in the ad, at a rate of 41.2 percent, as compared to 33.0 percent for women, resulting in a narrower gender gap.

Even though the gender gap was apparent when sorting for roles, the study indicates that among applicants, one cannot say with confidence that women are less likely to negotiate wages than men. In fact, in the case of ambiguity around negotiations, women and men negotiated at a rate of 8.2 percent and 10.6 percent respectively. When negotiations were explicitly made available, women actually negotiated at a higher rate than men (23.9 percent versus 22.0 percent).

The authors developed two main conclusions. First, men were more likely to apply for roles where salary negotiations were ambiguous and, in these settings, were more likely to negotiate than women. The authors do not believe this is evidence of differences in negotiation behavior. They point out that in positions where negotiable salaries were mentioned in the original ad, women actually negotiated at higher rates than men. Further, the difference between women’s and men’s negotiation behavior was small and not statistically significant.

Leibbrandt and List posit that salary negotiations have the ability to impact earnings outcomes and, as such, differences in gender-based negotiation styles may contribute to the existing gender gap in wages. Though the research did not find statistically significant differences in the overall negotiation behaviors, their findings about how women and men apply for jobs has potential implications for policymakers. Assessing the impact that the structure of job postings have on creating gender equality in the labor force may provide further insight into how to level the playing field for new job openings. Furthermore, research on how salary negotiation behaviors vary across industries both before and after initial job attainment appears to be a natural next step to understanding the overall impact of the authors’ findings.

Feature photo: cc/oooh.oooh