DP15093 Gender Differences in Wage Expectations: The Role of Biased Beliefs

Author(s): Stephanie Briel, Aderonke Osikominu, Gregor Pfeifer, Mirjam Reutter, Sascha Satlukal
Publication Date: July 2020
Date Revised: March 2021
Keyword(s): Biased Beliefs, Conditional Quantile Regression, decomposition analysis, Gender pay gap, Unconditional Quantile Regression (RIF-Regression), wage expectations
JEL(s): C21, D84, D91, J16
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15093

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.