Market Expectations, Job Search and Gender Differences in Starting Pay

Search theory suggests that if a woman anticipates discriminatory treatment in the labor market, she will lower her reservation wage which would, in turn, lead to lower pay. This prediction is tested using a data set of graduating college seniors. Results show that women had lower starting-pay expectations, even for men and women with the same major, job-market information, and job-search strategies. Lower pay expectations led to lower pay outcomes for women. However, women who engaged more intensively in career planning had pay expectations and starting pay more in line with those of men.