Do Women Ask for Less? Evidence From Reservation Wages in Italy

Gender gaps in labor market outcomes have traditionally been attributed to differences in individual productivity or to discrimination. More recently, however, several studies have documented the role of gender differences in psychological attitudes. To shed light on this issue, rather than using data on realized wages, we rely on data on reservation wages—the lowest wage workers are willing to accept—for a sample of Italian graduates. Reservation wages tend to reflect individual attitudes and beliefs more directly, while being less affected by employer discrimination. Using a descriptive approach, we first examine the association between reservation wages and educational background, academic performance, individual characteristics, and family background, and investigate how they depend on job seekers' labor market expectations. We then analyze how reservation wages depend on preferences over specific job attributes, such as part‐time arrangements, permanent positions, geographical mobility, commuting time, etc. Applying the Gelbach decomposition to quantify the contribution of each group of factors, we find a substantial role for preferences for job attributes and labor market expectations. However, our estimates reveal a large unexplained component which—in line with recent studies—is likely driven by gender differences in psychological and social attitudes, such as risk aversion, overconfidence, and adherence to social norms.