Working papers

Working papers

The role of the ask gap in gender pay inequality
Forthcoming (August 2024), Quarterly Journal of Economics

Click to view abstract The gender ask gap measures the extent to which women ask for lower salaries than comparable men. This paper studies its role in generating wage inequality, using novel data from an online recruitment platform for full-time engineering jobs: To use the platform, job candidates must post an ask salary, stating how much they want to make in their next job. Firms then apply to candidates by offering them a \textit{bid salary}, solely based on the candidate's resume and ask salary. If the candidate is hired, a final salary is recorded. After adjusting for resume characteristics, the ask gap is 2.9%, the bid gap is 2.2%, and the final offer gap is 1.4%. Further controlling for the ask salary explains the entirety of the residual gender gaps in bid and final salaries. To further provide evidence of the causal effect of the ask salary on the bid salary, I exploit an unanticipated change in how candidates were prompted to provide their ask. For some candidates in mid-2018, the answer box used to solicit the ask salary was changed from an empty field to an entry pre-filled with the median bid salary for similar candidates. I find that this change drove the ask, bid, and final offer gaps to zero. In addition, women did not receive fewer bids or final offers than men did due to the change, suggesting they faced little penalty for demanding comparable wages.

Media coverage: Bloomberg, BBC, Econimate

Worker Beliefs About Outside Options (with Simon Jäger, Chris Roth and Benjamin Schoefer)
Forthcoming (August 2024), Quarterly Journal of Economics

Click to view abstract Standard labor market models assume that workers hold accurate beliefs about the external wage distribution, and hence their outside options with other employers. We test this assumption by comparing German workers’ beliefs about outside options with objective benchmarks. First, we find that workers wrongly anchor their beliefs about outside options on their current wage: workers that would experience a 10% wage change if switching to their outside option only expect a 1% change. Second, workers in low-paying firms underestimate wages elsewhere. Third, in response to information about thewages of similarworkers, respondents correct their beliefs about their outside options and change their job search and wage negotiation intentions. Finally, we analyze the consequences of anchoring in a simple equilibrium model. In the model, anchored beliefs keep overly pessimistic workers stuck in low-wage jobs, which gives rise to monopsony power and labor market segmentation.

Media coverage: Brookings, Project Syndicate, Business Insider, BBC, Economic Report of the President/CEA Annual Report

Bidding for Talent: A Test of Conduct in a High-Wage Labor Market (with Benjamin Scuderi)
[Updated, February 2024]

Click to view abstract We develop a procedure for adjudicating between models of firm wage- setting conduct. Using data from a U.S. job search platform, we propose a methodology to aggregate workers’ choices over menus of jobs into rankings of firms’ non-wage amenities. We use these estimates to formulate a test of conduct based on exclusion restrictions. Oligopsonistic models incorporat- ing strategic interactions between firms and tailoring of wage offers to work- ers’ outside options are rejected in favor of monopsonistic models featuring near-uniform markdowns. Misspecification has meaningful consequences: our preferred model predicts average markdowns of 19.5%, while others predict average markdowns as large as 26.6%.

Asymmetric Peer Effects at Work: The Effect of White Coworkers on Black Women’s careers (with Elizabeth Linos and Sanaz Mobasseri)
[November 2023] Accepted, Management Science

Click to view abstract This paper investigates how having more White coworkers influences the subsequent retentionand promotion of Black, Asian, and Hispanic women and men. Studying 9,037 new hires at aprofessional services firm, we first document large racial turnover and promotion gaps: even aftercontrolling for observable characteristics, Black employees are 6.7 percentage points (32%) morelikely to turn over within two years and 18.7 percentage points (26%) less likely to be promotedon time than their White counterparts. The largest turnover gap is between Black and Whitewomen, at 8.9 percentage points (51%). Drawing on conditional random assignment of new hiresto initial project teams, we then show that a one standard deviation (14.0 percentage points) increase in the share of White coworkers is associated with a 10.6 percentage point increasein turnover for Black women. These effects are similar in magnitude to the overall turnovergap between White and Black women, and asymmetric: Black women are the only race-gendergroup whose turnover and promotion are negatively impacted by the racial composition of theircoworkers. We explore potential pathways through which these peer effects may emerge: whilethe share of White coworkers does not affect formal task assignment, Black women who wereinitially assigned to Whiter teams subsequently report fewer billable hours and more traininghours, and are more likely to be labeled as low performers in their first performance review.Our findings call for more research on how peer effects early in one’s career shape longer-termracial inequalities at work.

Tax Evasion and the Swiss Cheese Regulation (with Clara Martínez-Toledano)
[Updated, January 2024]

Click to view abstract This paper studies how investors respond to tax evasion regulations in offshore financial centers. We do so by analyzing the 2005 EU Savings Tax Directive, which introduced a withholding tax on interest income earned by EU households in Switzerland and other offshore centers. Exploiting a unique combination of public administrative Swiss datasets, we find that the reform barely curbed tax evasion: 73% of the European offshore wealth in Switzerland remained both undeclared and untaxed by the time the Directive was repealed. We show that the limited scope of the Directive is mainly explained by tax evaders’ active re-investment strategies in tax-exempt assets, as well as ownership transfer to sham corporations registered in tax havens. We rationalize the drivers of declarations by means of a model and document empirically that monetary incentives, such as the increase in the upfront tax in Switzerland or tax amnesties in the evader’s home country, appear to be the driving force behind the rise of declarations. Conversely, bilateral information exchange treaties that were praised as a way to “end bank secrecy” have the least effect on declarations.

Media coverage: Le Monde

Work in Progress

The Illusion of Time: Gender Gaps in Job Search and Employment (with Oriana Bandiera and Amen Jalal)