Webinar: Flexible Wages, Bargaining, and the Gender Wage Gap

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Existing evidence suggests that women fare worse than men in situations where they are required to bargain over a prize. Does the introduction of individual pay negotiations in industries historically characterized by rigid salaries disproportionately penalize women? We study this question by focusing on teachers in the aftermath of Wisconsin's Act 10, a 2011 state bill which dramatically redefined the rules of collective bargaining for public sector unions. Before Act 10, teacher pay was strictly determined on the basis of seniority and academic credentials using salary schedules, negotiated between each school district and the teacher's union. After Act 10, unions lost the authority to bargain over the schedule and districts became free to set teachers' pay more flexibly and on an individual basis. Using variation in the timing of expiration of collective bargaining agreements, we estimate the effect of the introduction of flexible pay on the difference in salaries of male and female teachers with similar seniority and education. We show that the introduction of flexible pay led to a significant decline in women's salaries relative to their male counterpart. This decline is not driven by a differential propensity for women to move across districts, differences in ability, or a higher scarcity of male teachers. The gap, however, appears larger in schools with male principals and districts with a male superintendent. Results from a survey of Wisconsin teachers confirms that female teachers are less likely to negotiate pay compared with their male counterparts, especially when their superintendent is a man, because they do not feel comfortable doing so. Joint with Barbara Biasi.