Shiya Wang

PhD Student, Organizational Behavior
PhD Program Office Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305

Shiya Wang

Research Interests

  • Economic sociology
  • Gender wage gap
  • Careers and labor markets
  • Entrepreneurship

Job Market Paper

On the Basis of Leverage: What the Salary History Ban Reveals About How Employers Set Initial Salary Offers

How employers set initial salary offers in the hiring process is a critical but overlooked juncture for examining how gender disparities in pay arise. Studies of hiring have predominantly focused on the effect of gender and race on who gets hired and into what jobs. Little work has examined how these factors affect initial salary offers extended by employers, even though offers anchor salary negotiations and set the floor for candidates' future wages. Using a large-scale, proprietary data set of over 870,000 initial salary offers in the U.S. from 2017 to 2020, I document, for the first time in the literature, a gender gap in initial salary offers, after accounting for observable differences in human capital, jobs, and industries. To investigate how the gender offer gap arises, I take advantage of an exogenous state and county level policy shock in the U.S., the salary history ban, combined with in-depth interviews with hiring managers and compensation experts. I argue that employers evaluate candidates differently when deciding how much to offer versus who gets an offer. Less concerned with assessing candidates' quality, employers gauge the lowest wage for which candidates are willing to work by relying on their past salary information. When denied this information, employers are more conservative in gauging candidates' reservation wage. I find that the removal of past salary information is associated with an increase in initial salary offers on average, but a greater increase in women's offers, thereby reducing the gender offer gap. I close with a discussion of how this study contributes to the literature on gender inequality, pay-setting, and hiring.