Research finds gender pay variations start early, with the job search

A brand new paper within the Quarterly Journal of Economics, printed by Oxford College Press, signifies that an vital a part of the pay hole between women and men has to do with how they conduct job searches, with ladies extra more likely to settle for job presents early whereas males have a tendency to carry out for increased pay.

Ladies in the US earn 84% of what males earn, as of 2020. This disparity is nicely documented, and economists and the normal public have identified concerning the earnings distinction for many years. The explanations for this phenomenon are a matter of appreciable debate.

Preliminary circumstances within the labor market are long-lasting. Younger staff who start their careers throughout a recession face decrease wages for at the very least 10 years relative to cohorts that entered throughout higher financial instances. Since staff sometimes change jobs a number of instances over their lives, private traits that matter in early-career job searches (i.e., danger aversion and biased beliefs about their incomes potential) will possible matter for subsequent job searches.

Since on the lookout for a job is an advanced course of that includes appreciable uncertainty, variations in preferences and beliefs by gender are more likely to result in completely different job search conduct and outcomes. However, economists know surprisingly little about how these attributes contribute to gender variations in early-career gender pay gaps.

A possible purpose for that is that researchers often have restricted info on job search conduct all through the job search course of, the presents that individuals obtain, and measures of danger aversion and biased beliefs. Even in circumstances the place such info is obtainable, the main target is often on unemployed staff basically and never on the gender dimension.

However the proof right here comes from surveys on job presents and acceptances from current undergraduate alumni of Boston College’s enterprise college, the place one of many examine’s authors teaches. Researchers requested graduates from the 2013-2019 graduating lessons particulars concerning the job search course of that led to their first job after graduating, such because the traits of their accepted and rejected presents, together with wage parts, job traits, job supply timing, and when the supply was accepted or not.

As well as, for the 2018 and 2019 cohorts, researchers additionally surveyed college students earlier than the beginning of the job search course of and picked up knowledge on college students’ subjective beliefs relating to the variety of presents and wage presents, and so on.

The examine’s authors discovered that girls, on common, accepted positions about one month sooner than their male counterparts (60% of girls accepted a job earlier than commencement, in comparison with 52% of males). There was a transparent, massive gender hole in accepted presents, and the hole narrowed in favor of girls over the course of the job search. The typical gender hole (i.e., male-female distinction) throughout all accepted presents began at round 16% in August of the senior yr and declined to about 10% eight months after commencement.

The researchers right here consider that this gender distinction will be partially accounted for by males’s higher danger tolerance and overconfidence of their wage potential. In reality, they discover systematic patterns between these traits and search outcomes. For instance, extra risk-averse people reported decrease reservation wages and accepted presents earlier.

The findings echo the same statement within the area the place, relative to ladies, males usually tend to have rejected a suggestion that’s increased than the one which they find yourself accepting, are much less glad with the job search course of, and remorse some side of their job search.

Taken collectively, danger tolerance and wage expectations could clarify a large proportion of the noticed gender distinction in earnings. Total, danger preferences account for about 20% of the gender hole in job search timing. Empirically, the online impact of wage and search timing ends in a optimistic affiliation between danger tolerance/overconfidence and the timing of job acceptance. Gender variations in danger preferences and wage overoptimism account for a non-trivial proportion (about 30%) of the hole in accepted earnings.

“Our examine reveals that variations in the best way women and men seek for jobs matter for gender pay gaps in early profession,” mentioned the paper’s lead creator, Patricia Cortes.

“Gender variations in danger preferences and overconfidence about future job presents lead to ladies having decrease reservation earnings, which interprets into earlier acceptance of lower-paying job presents. Gender variations in these traits could clarify as a lot as 30% of the distinction between males’s and ladies’s earnings of their first jobs.”