Working papers

The role of the ask gap in gender pay inequality
[Updated, August 2023] Conditionally accepted, 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)
[Updated, March 2023] Conditionally accepted, 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, July 2023]

Click to view abstract We develop a procedure for adjudicating between models of firm wage-setting conduct. Using data on workers’ choice sets and decisions over real jobs from a U.S. job search platform, we first estimate workers’ rankings over firms’ non-wage amenities. We document three key findings: 1) On average, workers are willing to accept 12.3% lower salaries for a 1-S.D. improvement in amenities. 2) Between-worker preference dispersion is equally large, indicating that preferences are not well-described by a single ranking. 3) High-paying firms have better amenities. Following the modern IO literature, we use these estimates to formulate a test of conduct based on exclusion restrictions. Oligopsonistic models incorporating strategic interactions between firms and tailoring of wage offers to workers’ outside options are rejected in favor of simpler monopsonistic models featuring near-uniform markdowns. Misspecification has meaningful consequences: while our preferred model predicts average markdowns of 19.5%, others predict average markdowns as large as 26.6%.

Tax Evasion and the Swiss Cheese Regulation (with Clara Martínez-Toledano)
[Updated, March 2023]

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

Works in progress

Measuring the Incidence of Wage Subsidies Under Imperfect Competition (with Benjamin Scuderi)

Persistent Labor Market Impact of Exposure to Temporary Migration (with Chloe De Meulenaer and Mathilde Munoz)

Asymmetric Peer Effects at Work: How White Coworkers Shape the Careers of ‘‘People of Color’‘ (with Elizabeth Linos and Sanaz Mobasseri)