Do you get what you ask? The gender gap in desired and realised wages

The purpose of this paper is to study gender differences in wage bargaining by comparing the unexplained wage gap in desired, realised and reservation wages.

The notion of desired wages is applied, which shows workers’ first bet to potential employers during the job-search process. A large job-search data set is drawn from the main Estonian electronic job-search site CV Keskus.

It is found that the unexplained gender wage gap is around 20 per cent in desired wages and in realised wages, which supports the view that the gender income gap in expectations compares well with the realised income gap. The unexplained gender wage gap is larger in desired wages than in reservation wages for unemployed individuals, and this suggests that women ask for wages that are closer to their reservation wages men do. Occupational and sectoral mobility is unable to explain a significant additional part of the gender wage gap.

The paper adds to the scarce empirical evidence on the role of the non-experimental wage negotiation process in the gender wage gap. In addition, the authors seek to explain one of the largest unexplained gender wage gaps in Europe, the one in Estonia, by introducing a novel set of variables for occupational and sectoral mobility from a lengthy retrospective panel.