Paul Muller, Vrije Universiteit Amsterdam

"Do Wage Negotiations Contribute to the Gender Pay Gap? Evidence from Expatriates in the Netherlands"

Abstract

This study examines whether gender differences in wage negotiations contribute to the gender pay gap. To isolate the importance of wage negotiations for earnings, we exploit a substantial negative wage shock among mid- and high-earning migrants in the Netherlands once their tax benefits (the “30%-rule”) expires. Expiration occurs after 5 to 10 years in the Netherlands, and reduces net income by at least 8,000 Euro annually, generating a strong incentive to renegotiate the wage. Our findings reveal that while wages for both genders increase after the loss of fiscal benefits, men experience an average wage increase that is approximately 0.8-1.5 percentage points higher than that of women. The difference is particularly pronounced among employees with higher earnings. It is also larger in the private sector, and among migrants from outside the EU. These results suggest that wage negotiations significantly contribute to the gender pay gap, explaining a large part of the 9.5% unadjusted gender pay gap in our sample.

Joint with Mark van der Meijden, Lisa Timm, and Massimo Giuliodori.

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Contact person: Robert Mahlstedt