Gender differences in wage expectations.

Ana Fernandes,Giannina Vaccaro,Martin Huber,Semih Tumen

doi:10.1371/journal.pone.0250892

Abstract

Using an own survey on wage expectations among students at two Swiss institutions of higher education, we examine the wage expectations of our respondents along two main lines. First, we investigate the rationality of wage expectations by comparing average expected wages from our sample with those of similar graduates; further, we examine how our respondents revise their expectations when provided information about actual wages. Second, using causal mediation analysis, we test whether the consideration of a rich set of personal and professional controls, inclusive of preferences on family formation and number of children in addition to professional preferences, accounts for the difference in wage expectations across genders. Results suggest that both males and females overestimate their wages compared to actual ones and that males respond in an overconfident manner to information about realized wages. Personal mediators alone cannot explain the indirect effect of gender on wage expectations; however, when combined with professional mediators, this results in a quantitatively large reduction in the unexplained effect of gender on wage expectations. Nonetheless, a non-negligible and statistically significant direct (or unexplained) effect of gender on wage expectations remains in several, but not all specifications.

Highlights

Marked differences remain in today’s labor market concerning the professional paths of men and women. [1], for example, survey the research on the gender wage gap and find that, despite considerable gender wage convergence during the period 1980-2010, that process was much less pronounced at the top of the wage distribution
Gender differences in wage expectations hand, to examine whether this expectational wage gap is rational, in the sense of matching actual wages from comparable groups in the population, and, further, in the way that our respondents react to information about actual wages; on the other hand, we test whether the gender differences in wage forecasts of our respondents are explained by differences in their professional and personal preferences
Using novel survey data from students from the Business School of the Bern University of Applied Science (BUAS) and the Faculty of Economic and Social Sciences of the University of Fribourg, this paper advances the literature related to gender differences in wage expectations in two specific ways

Summary

Introduction

Marked differences remain in today’s labor market concerning the professional paths of men and women. [1], for example, survey the research on the gender wage gap and find that, despite considerable gender wage convergence during the period 1980-2010, that process was much less pronounced at the top of the wage distribution. [1], for example, survey the research on the gender wage gap and find that, despite considerable gender wage convergence during the period 1980-2010, that process was much less pronounced at the top of the wage distribution It was the explained part of the gap that declined, indicating gains in education and experience of women relative to men, whereas the unexplained part of the gap did not change much. Given the well-established and well-known gender wage gap, as well as the different paths that women and men typically follow in the labor market, rational and forward looking men and women, when asked about wage expectations about their own individual future, would generate forecasts in line with the actual gender wage gap.

Literature review

Methodological framework

Results

Conclusion