This study investigates why women have much lower wage expectations then men even before labor market entry. We elicit individual wage expectations, expectations about future job characteristics, and individual preferences and traits from a sample of over 15,000 students. Using these data, we document that female students expect to earn roughly 17 percent lower wages than male students on their first job and that this gap increases to 30 percent when looking at the expectations for wages at age 55. The accumulated life-cycle gap in expected labor earnings amounts to around 500,000 EUR. We then decompose the expected wage gap into components attributable to expected labor force interruptions, expected number of hours worked, expected discrimination, study subject, self-reported wage negotiation styles, personality traits, economic preferences, IQ and subjective ability. Our results indicate that a large portion of the overall gap in expected wages relate to sorting into different study subjects/occupations and negotiation styles, while individual traits and expected labor force interruptions are largely unimportant. |
