No surprise here: New study finds gender differences in preferences for higher earnings vs. other job attributes

From Mark Perry.

"Who-d a Thunk It? Men and women display differences in preferences when it comes to job attributes and career choices?

 

I think we knew that already, but that’s the main conclusion of some interesting new research that investigates gender differences in preferences for higher monetary earnings versus other non-wage job attributes by estimating how men and women differ in their “willingness-to-pay” with lower earnings for: a) more job security, b) greater workplace hours flexibility, and c) higher future earnings potential. Not surprisingly, women favor job security and more flexible, family-friendly workplaces over earnings, and men place a higher priority on earnings over other job attributes.

Here’s part of the abstract from the research article “Preference for the Workplace, Investment in Human Capital, and Gender” by economists Matthew Wiswall of Arizona State University and Basit Zafar of the New York Federal Reserve (emphasis mine).

In this paper, we use a hypothetical choice methodology to robustly estimate preferences for workplace attributes. Undergraduate students are presented with sets of jobs that vary in their attributes (such as earnings and job hours flexibility) and asked to state their probabilistic choices. We find that women, on average, have a higher willingness-to-pay [in reduced earnings] for jobs with greater work flexibility (lower hours, and part-time option availability) and job stability (lower risk of job loss), while men have a higher willingness to pay [in reduced current earnings] for jobs with higher [future] earnings growth.

From the paper’s introduction:

We collect data on job attribute preferences through a survey in which we present undergraduate students with a series of hypothetical job choice scenarios and elicit their expected future choices across the jobs. The hypothetical job scenarios were constructed to offer students a realistic menu of potential jobs varying in expected earnings and other characteristics such as future earnings growth, dismissal probability, and work hours flexibility.

From the paper’s empirical findings (summarized in the table above):

In our sample of high ability students, we estimate considerable heterogeneity in preferences for workplace attributes: students have preferences reflecting, on average, a dis-taste for higher job dismissal potential, and a taste for workplace hours flexibility. We estimate that on average students are willing to give up 2.8% of annual earnings for a job with a percentage point lower probability of job dismissal. The largest average willingness-to-pay (WTP) estimate is for the availability of a part-time hours option. Individuals, on average, are willing to give up 5.1% of their salary to have a job which offers the option of working part-time hours rather than one that does not offer this option.
When dividing our sample by gender, we find that, on average, women have a higher preference for workplace hours flexibility, with an implied WTP of 7.3% compared to 1% for men. Likewise, women have a higher WTP for more secure jobs – they are willing to give up 4% of their salary for a percentage point lower probability of job dismissal (versus a 0.6% WTP for males). On the other hand, men have a higher WTP for jobs with higher earnings growth: they are willing to give up 3.4% of annual earnings for a job with a percentage point higher earnings growth (the corresponding estimate for women is a statistically insignificant 0.6%).

From the paper’s conclusions:

On average, females have a stronger taste for workplace flexibility (as measured by hours and part-time availability) and job stability. Males, on average, have a greater willingness to pay [with reduced current earnings] for jobs with higher earnings growth. Our results suggest that part of the gender gap in earnings we observe is a compensating differential in which women are willing to give up higher earnings to obtain other job attributes.

Further the researchers relate job attribute preferences to the choice of college major by gender and they find that:

Students perceive jobs offered to humanities majors to have fewer hours, more worktime flexibility, and higher stability than jobs offered to economics/business majors. These job attributes are found to play a role in major choice, with women exhibiting greater sensitivity to non-pecuniary job attributes in major choice.

These new findings are consistent with previous research conducted by the Department of Labor in a report released in 2009 titled “An Analysis of Reasons for the Disparity in Wages Between Men and Women,” which concluded that:

1. A greater percentage of women than men tend to work part-time.
2. A greater percentage of women than men tend to leave the labor force for child birth, child care and elder care. Some of the wage gap is explained by the percentage of women who were not in the labor force during previous years, the age of women, and the number of children in the home.
3. Women, especially working mothers, tend to value “family friendly” workplace policies more than men. Some of the wage gap is explained by industry and occupation, particularly, the percentage of women who work in the industry and occupation.

From that study’s conclusion:

This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.

My Prediction: No amount of empirical evidence like from the two studies referenced above will stop the gender pay gap activists, feminists, and politicians like Hillary Clinton from continuing to spread the discrimination-based “77 cents on the dollar” gender pay gap myth.  Moreover, there will be continued calls for government intervention, new legislation and executive orders to use government force to “correct” what are mostly natural aggregate gender differences in wages that are not the result of gender discrimination, but rather are the result of individual and voluntary choices being made by both men and women about workplace preferences and career choices."