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The Gender Gap in Wage expectations

New study highlights the wage gap in people's minds.

Ein Mann und eine Frau beim Handschlag am Kaffeehaustisch

Even before completing their studies, young women expect to earn significantly less than their male counterparts and these differences in expectations likely translate into actual earnings differentials. This is the conclusion reached by a research team led by WiSo professor Pia Pinger in a recent study.

While female students expect an average starting salary of around 33,400 euros, male graduates expect significantly higher sums of just over 39,000 euros. The gap in wage expectations is thus surprisingly close to the real wage differences. For their study, the researchers evaluated data from 15,348 students and 1,155 graduates.
Male-female wage expectations with regard to professional careers diverge even before graduation. For example, the wage that men expect to earn on average after only nine years of employment almost equals the salary that women expect as the highest wage of their entire career (49,000 euros after nine years for male students compared to a max of 51,000 euros for female students).
The study revealed that women's lower income expectations were almost independent of the subject of study. Confidence in one's own abilities proved largely unimportant as did exposure to different wage gaps in actual labour market.
The results of the study rather suggest that, in addition to the selection of occupations and sectors, different negotiation styles of men and women translate into expected wage differences. In prospective wage negotiations, women mostly plan to ask for a wage close to their reservation wage. In contrast, male students pose higher initial demands leaving more room for negotiation. A bolder negotiating style among male career starters thus seems to pay off.
In the opinion of the scientists, targeted negotiation trainings for women could, therefore, be a means to close the wage gap in people's minds and in reality. In addition, they conclude that it might be more promising, to inform women about the actual wage gap and about child-related wage penalties, than to encourage women to enter male-dominated fields, where relative wage differences are larger. This could motivate young women to negotiate a more equal distribution of child rearing responsibilities in a world where expectations seem to affect reality more than vice versa.

IZA working paper No. 12522: Gender Differences in Wage Expectations: Sorting, Children, and Negotiation Styles