Outside opportunities and the gender pay gap

A growing literature suggests that outside job offers are an important component of on-the-job wage growth. A standard hypothesis is that the labour market is characterised by a sequence of offers from different firms and that workers can use these to re-negotiate their salary, up to the level when the outside offer is better than the highest salary that the current employer is willing to pay (Postel-Vinay and Robin, 2002). Such outside opportunities may contribute to the gender wage gap if a smaller subset of job arrivals is relevant to women (e.g. due to family constraints) or if women are less willing to negotiate with current employers in response to relevant outside job offers. We shed some light on this source of gender wage inequality by studying male and female wage responses to outside job opportunities that arise through family networks. The project sheds some light on a specific channel through which gender differences in rent-sharing can emerge.