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Women are up to the challenge of negotiating pay

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27 November 2012

mediation

Pay differences between men and women cannot be readily attributed to the willingness to negotiate pay, according to new research.

Negotiation is often seen as a major factor in why men earn more and hold more senior management positions and decision-making roles than women.

One explanation given for the persistent pay differences between men and women in labour markets is that women avoid salary negotiations. Such negotiations have the potential to determine labour market outcomes, and how and why men and women negotiate is often considered to be an important contributor to the existing gender differences in pay rates.

In a new study, researchers from Monash University and the University of Chicago examined over 2,400 responses by job seekers to two administrative assistant positions advertised in nine major US cities, where one advertisement indicated the pay was set and the other that it was negotiable.

Monash University researcher Dr Andreas Leibbrandt from the Department of Economics said men and women exhibited similar willingness to negotiate remuneration.

“The results of the research indicate that while their approach may differ, both men and women are equally willing to negotiate for more pay, so other factors have to be taken into account to explain the disparity in wage levels for men and women,” Dr Leibbrandt said.

The research found that when there was no explicit statement that wages were negotiable, men were only slightly more likely than women to initiate salary discussions (10.6 per cent as opposed to 8.2 per cent).

When the job advertisement mentioned the possibility of wage negotiation, women were actually more likely to initiate salary discussions (23.9 per cent of women and 22 per cent of men).

The study suggests the gender gap in wages cannot be universally and easily explained by saying that men only apply for positions where they can initiate wage negotiations and women apply for positions that offer negotiable rates of pay.

“More research is certainly necessary to improve our understanding of the role of negotiations in workplaces, and we hope that our study motivates further research on negotiations in labour markets,” Dr Leibbrandt said. 

The study was published in the National Bureau for Economic Research Working Paper Series.