Why is there a gender wage gap? Because women are smarter.

Alright it’s a controversial title, but the intent was to grab your attention. Besides, gender issues tend to be very controversial by default.

There seems to be a lot of debate going around on Facebook this week regarding the wage gap between men and women. I won’t deny that there is a wage gap, even when looking at individuals with the exact same job, skill level, and age. According to NPR, even when comparing these otherwise identical individuals, women tend to make 5 to 10 cents less on the dollar than men do. To some, this would automatically indicate that some employers are gender biased and discriminate in favor of men. However, I will pose an alternative theory. Rather than blame the wage gap on discrimination, I will attribute it to differing wage negotiating strategies – and argue that (in my subjective opinion) women tend to have superior wage negotiating strategies over men.

First, let’s look at what choices an individual faces when negotiating for a salary. There are two basic approaches. An individual could ask for a relatively high wage, realizing that he or she is more likely to be turned down. As long as this individual plans on applying to lots of firms, this approach could work out. On the other hand, an individual could ask for a wage slightly lower than average for other workers of his or her level of skill, knowing full well that the employer will be getting a bargain if he or she hires this individual. In a rough job market with relatively high unemployment, this strategy would seem to be a smarter approach.

Now I’m going to bring up some controversial differences between men and women that have been pointed out to me on numerous occasions in finance classes, economics classes, news stations (Fox News, CNN, NPR, etc.), and a host of other sources. In the field of finance, it is generally accepted that men are more willing to take risks, gamble, or make decisions on emotional impulses — while women tend to be less impulsive and make more cautious and sound financial decisions. That’s not to say that all women make better financial choices than all men. Rather, on the average these (small) differences between genders have been observed time and again.

Taking this theory to the issue of the wage gap, the gap could be attributed to an increased likelihood of women to pursue the bargain-employee strategy rather than gamble and ask for a higher than average wage. If this were true, we would expect to see higher unemployment rates among men than women. This has in fact been empirically observed in nearly all studies. I could humorously claim that there is an “employment gap” between women and men, and rightly claim that men tend to have higher unemployment rates than women do and stay unemployed longer than women do – but I would add that I do not believe this is due to gender discrimination against men. Rather, women might fare better finding and keeping jobs because of their superior wage-negotiating strategy. After all, you’re better off working 40 hours a week making 95 cents on the dollar than working zero hours per week making 100 cents on the dollar (that’s simple math).

I’ll add that this is just a theory, and a controversial one at that (as I noted in the beginning, gender differences tend to be controversial). Some people may still claim that employers tend to be misogynist and discriminate against women by paying them slightly less than men. However, I would find it hard to believe that these same misogynist employers are more likely to hire women and more likely to fire men. Rather than blame discrimination, I’d point to differences in job hunting strategies. Given the current state of the economy, I’ll add that the bargain-employee strategy, which women seem to prefer, is a more intelligent strategy to use.

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