The gender gap in pre-career salary expectations: a test of five explanations

The purpose of this paper is to investigate the gender gap in pre-career salary expectations. Five major explanations are tested to explain the gap, as well as understand the relative contribution of each explanation.

Data were collected from 452 post-secondary students from Canada.

Young women had lower initial and peak salary expectations than their male counterparts. The gap in peak salary could be explained by initial salary expectations, beta values, the interaction between beta values and gender, and estimations of the value of the labor market. Men and women in this study expected to earn a considerably larger peak salary than they expected for others.

Cross-sectional data cannot infer causality, and the Canadian sample may not be generalizable to other countries given that an economic downturn occurred at time of data collection. Research should continue to investigate how individuals establish initial salary expectations, while also testing more dynamic models given the interaction effect found in terms of gender and work values in explaining salary expectations.

The majority of the gender gap in peak salary expectations can be explained by what men and women expect to earn immediately after graduation. Further, women and men have different perceptions of the value they attribute to the labor market and what might be a fair wage, especially when considering beta work values.

The data suggests that the gender-wage gap is likely to continue and that both young men and women would benefit from greater education and information with respect to the labor market and what they can reasonably expect to earn, not just initially, but from a long-term perspective.

This study is the first to simultaneously investigate five theoretical explanations for the gender gap in pre-career expectations.