Pushing the Envelope: The Effects of Salary Negotiations

Zoë B. Cullen, Bobak Pakzad-Hurson and Ricardo Perez-Truglia

No 33903, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Salary negotiations are a widespread phenomenon that can shape labor market outcomes, including compensation and inequality. We provide novel empirical and theoretical insights into the causes and consequences of salary negotiations. We conducted a field experiment with over 2,000 U.S. job seekers in technology roles. We find that a light-touch encouragement treatment significantly increased both negotiation attempts and compensation gains, suggesting that information frictions cause some workers to leave money on the table. In the supplemental survey, we find that workers perceive significant risks from negotiating, including the possibility of having their job offers rescinded. We develop a new model of salary negotiations that incorporates information frictions, the risk of employer backlash, and strategic choices across employment options to better explain our experimental and non-experimental findings. Overall, our study suggests that reducing misperceptions and uncertainty around negotiation repercussions would meaningfully improve worker surplus.

JEL-codes: C9 D80 J30 J38 J7 (search for similar items in EconPapers)
Date: 2025-06
New Economics Papers: this item is included in nep-exp and nep-lma
Note: CH LS PE
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.nber.org/papers/w33903.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:33903

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33903
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().