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Gender Differences in Wage Expectations: The Role of Biased Beliefs

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  • Osikominu, Aderonke
  • Briel, Stephanie
  • Pfeifer, Gregor
  • Reutter, Mirjam
  • Satlukal, Sascha

Abstract

We analyze gender differences in expected starting salaries along the wage expectations distribution of prospective university students in Germany, using elicited beliefs about both own salaries and salaries for average other students in the same field. Unconditional and conditional quantile regressions show 5-15% lower wage expectations for females. At all percentiles considered, the gender gap is more pronounced in the distribution of expected own salary than in the distribution of wages expected for average other students. Decomposition results show that biased beliefs about the own earnings potential relative to others and about average salaries play a major role in explaining the gender gap in wage expectations for oneself.

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  • Osikominu, Aderonke & Briel, Stephanie & Pfeifer, Gregor & Reutter, Mirjam & Satlukal, Sascha, 2021. "Gender Differences in Wage Expectations: The Role of Biased Beliefs," CEPR Discussion Papers 15093, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15093
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    Cited by:

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    2. Bonaccolto-Töpfer, Marina & Briel, Stephanie, 2022. "The gender pay gap revisited: Does machine learning offer new insights?," Labour Economics, Elsevier, vol. 78(C).
    3. Bernd Fitzenberger & Roger Koenker & José Machado & Blaise Melly, 2022. "Economic applications of quantile regression 2.0," Empirical Economics, Springer, vol. 62(1), pages 1-6, January.
    4. Maria A. Cattaneo, 2022. "What wages do people expect for vocational and academic education backgrounds in Switzerland?," Economics of Education Working Paper Series 0197, University of Zurich, Department of Business Administration (IBW).
    5. Koşar, Gizem & van der Klaauw, Wilbert, 2023. "Workers' Perceptions of Earnings Growth and Employment Risk," IZA Discussion Papers 16013, Institute of Labor Economics (IZA).
    6. Adamecz-Völgyi, Anna & Shure, Nikki, 2022. "The gender gap in top jobs – The role of overconfidence," Labour Economics, Elsevier, vol. 79(C).
    7. Ana Fernandes & Martin Huber & Giannina Vaccaro, 2021. "Gender differences in wage expectations," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-24, June.

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    More about this item

    Keywords

    Gender pay gap; Wage expectations; Biased beliefs; Decomposition analysis; Conditional quantile regression; Unconditional quantile regression (rif-regression);
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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