Gender Differences in Job Search and the Earnings Gap: Evidence from Business Majors
In the United States, the long-time disparity in men’s and women’s average earnings extends across skill levels.
To explain why the gender pay gap persists between men and women with similar educational backgrounds and skills, researchers have documented robust differences in risk preferences and overconfidence between men and women, with women exhibiting a greater degree of risk aversion and men displaying a greater degree of overconfidence in their relative ability. Although risk preferences and beliefs about relative ability are particularly relevant in the job search process, little has been known about gender differences in labor market search behavior and the attendant impacts on gender wage gaps.
In a new National Bureau of Economic Research working paper, Human Capital Initiative Associate Director Patricia Cortés, Jessica Pan, Laura Pilossoph and Basit Zafar draw on rich retrospective survey data on job offers and acceptances collected from recent undergraduate alumni of the Boston University Questrom School of Business to document novel facts about gender differences in the job search process. Additionally, the authors construct a model to help explain the relationship between gender differences in job search behavior and the gender pay gap.
- There is a clear gender difference in the timing of acceptance of the first job after graduation. Women, on average, accept jobs about one month earlier than their male counterparts (60 percent of women have accepted a job before graduation, compared to 52 percent of males), a finding consistent across concentration and industry choice.
- The gender earnings gap in accepted job offers narrows in favor of women over the course of the job search period. In August of senior year, the average salary of job offers accepted by men is 17 percent higher than the average salary of job offers accepted by women. By the October following graduation, the average salary of job offers accepted by men is about 10 percent higher than that of women.
The study represents an important contribution to the literature on gender disparities in the professional world. On average, more risk-tolerant students tend to accept jobs later, and there is a strong positive relationship between risk tolerance and accepted offer wages. Gender differences in risk preferences account for a non-trivial proportion of the gender gap in accepted earnings and, at the individual level, the degree of overoptimism is strongly, positively associated with the month of job acceptance.
Cortés and coauthors also offer two suggestions for decreasing the early-career gender earnings gap among the highly skilled. Better informing students about the realities of the job market and allowing students to hold onto job offers for longer could minimize the role of risk preferences, and therefore reduce the influence of gender differences in behavior on the job search.Read the Working Paper Read the Blog