Research has shown the importance of knowing how much to ask in salary negotiations. Women, especially, have tended to negotiate less than men. Nina Rousille studied the recruitment process in hired.com, a platform for jobseekers. She found an “ask gap”. On average, women ask for salaries three per cent smaller than what men ask. She sat down for a chat with Anna Bevan (LSE Audio & Film) for the LSE IQ podcast. 

Listen to the LSE IQ podcast on the gender pay gap here.

Your research focuses on the “ask gap”. What is it, and how does it impact the gender pay gap?

Traditional explanations have failed to explain why we’re still seeing a gender pay gap today. Now we’re turning to more subtle explanations. And one of them, which is a question I study, is around women’s inclination for negotiation and the information they have about the wages they can ask for.

Just to give it the right focus, for women in high-paying occupations, the salary is established via negotiation with the employer. It’s been shown for quite a while that knowing how much to ask for really matters. In particular, women have negotiated less than men in the past, but it hasn’t been empirically shown how that impacts the salary offers they receive. This is what my story is about. My story is about, are women asking for less than men, even with very similar resumes? And how does that impact the salary offers that they get from employers?

Can you tell us more about your research?

I’ll start with the setting, which is a website called hired.com, a platform for job seekers. Their originality is the way they do recruitment. To be recruited and hired, you post a profile, which will have two features. One of them is your resume characteristics. The other is how much you want to make in your next job. This is what I label the “ask salary”.

Based on these profiles, firms decide whether or not to interview candidates. When they reach out to candidates, they do it with a bid salary, which is how much they would be willing to pay based on the candidate’s profile, which includes resume and ask salary. You can already see that the initial decision candidates make about how much to ask impacts what firms decide to offer. If you negotiate with an employer, they’re going to ask you what you expect to make. This platform’s negotiation process has been observed in other real-life settings. Right off the bat, if I look at a man and a woman with similar resumes on the platform, the woman is on average asking for three per cent less than the man.

You might wonder if three per cent is small or large. Again, keep in mind that this is in high-paying jobs, with an average salary of around $120,000. How much is three per cent of that? The most experienced women have the largest gaps. If you go to women with more than 15 years of experience compared to men with the same experience, the ask gap is closer to six percent. And there is a gap of the same dimension in the offers that firms make to men versus women. You can explain 100 per cent of this gap by the “ask” differences.

Why do you think women are asking for less?

To answer that question and define a cleaner relationship between the ask and the bid, we ran a quasi-experiment on the platform in mid-2018, changing the way candidates entered their ask salary in their profile. Before, they had to fill out an empty text box. After the change, a default number was inputted, replacing the empty text box with a suggestion tailored to the candidate’s level of experience, job title and location. And it was made clear that the suggested number was the median salary on the platform for a candidate that looks like you. This shift made women ask for the same salary as men, the gender gap between men and women in ask salary went to zero and, encouragingly, the gap in offers as well.

This tells us that women adjusted upwards their ask in response to the suggestion. Now we can rule out a number of stories that people may tell as to why they were asking for less. For example, it’s traditionally said that women may prefer “lower paying jobs” because they like more family-friendly job amenities or more flexibility. They would be intentionally asking for less because they want to negotiate on other fronts.

Another story is that women are too risk averse and if you told them, “this is how much you could ask for” maybe they would still not ask for it because they’re scared of getting pushback or losing the opportunity to get the job. But, when armed with information, women started asking for the same as men, which tells us that these stories, at least in the context that I study, are not true. The most obvious interpretation of the result, although I can’t fully prove it, is that women didn’t have the same information as men to ask for the right number.

Keep in mind that software engineers are the majority of people on that platform, where the  gender divide is, like, 80 per cent men, 20 per cent women. That’s true of software engineers and a lot of high-paying positions. Arriving in those positions, women are at a disadvantage. In networks, men exchange information with men and women with women, which creates these silos where women just don’t have access to know what to ask for. In this context, information is a way to level the playing field.

Information and, I guess, transparency, as well?

Exactly. It’s very interesting that you mentioned transparency because that’s a broader policy topic at the forefront of the policy conversations right now. If we look at the US, some states have adopted laws striking salary confidentiality. When employers post a job on a platform or on their websites, they need to state the salary they’re willing to pay.

Policymakers are realising that information plays a key role in reallocating power away from firms and towards workers for them to make better job decisions. Giving the same information to women and men when it comes to choosing between jobs could have great implications for the gender pay gap. France has been talking about a similar policy. Would that help solve the gender pay gap? Yes. I would say that information frictions are one of the main motives in the gender pay gap.

Another side to my research is trying to understand if workers are not well informed about the wages at other firms. They may get stuck at a low-paying employer just because they don’t know they could be paid more elsewhere. That gives this employer labour market power. With more transparency, we enter a world where the knowledge that others are paying better empowers workers to negotiate with their current employer, or to leave. In a lot of jobs, people don’t really have the power to negotiate their salaries.

How did you gain access to the data from hired.com?

That’s a funny story. I was a graduate student at UC Berkeley at the time, and I was seeing ads for this platform everywhere on the buses going to school. And I was like, wow, that’s a very intriguing platform. My strategy to try and talk to them was quite desperate. I bought a ticket to a women-who-code conference where their VP of engineering was giving a talk.

I thought, this woman is talking at a women’s conference, she must be interested in gender equality. She could become an ally. I went to her talk and waited anxiously at the bottom of the stage. When she finished, I asked for two minutes of her time and pitched my idea. She became an ally from the start and allowed me to pitch this to the broader company. From the start, they were all very enthusiastic.

Does the ask gap entirely explain the gender pay gap on the platform or are other factors at play?

The ask gap explains the entirety of the gender gap in offers to men and women with a similar resume. Now, it’s true that men tend to be in higher paying jobs in the broader economy. On the platform, men are more likely to be software engineers than in other sides of the tech sector. They also select into those higher paying jobs, which is true more widely in the economy. Women at this point are more educated than men, in OECD countries at least. But their college degrees are more likely to be in psychology or the humanities, fields that pay less than computer science. Plus, they’re still selecting into lower paying jobs.

These differences in occupations explain part of the gap. This may sound like it’s purely women’s preference, but it’s not. It’s an entire gender construct that says, for example, that women are there for care. Then, we find more women in the humanities or in healthcare.

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• This Q&A is an excerpt of the LSE IQ podcast on the gender gap.
• The post represents the views of the author(s), not the position of LSE Business Review or the London School of Economics and Political Science.
• Featured image courtesy of the author
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