A recent IZA Discussion Paper by Anna Adamecz and Nikki Shure investigates the role of non-cognitive traits, specifically underconfidence, in explaining the persistent gender wage gap. Using data from the British Cohort Study 1970, the researchers find that overconfidence contributes to around 5.5% of the gender wage gap at age 42. Notably, this is driven by women being more underconfident rather than men being more overconfident.
The study highlights a significant wage penalty for underconfident individuals, regardless of gender, though women are disproportionately affected due to their higher likelihood of being underconfident. This underconfidence results in lower wages, primarily due to occupational sorting, poorer pre-university educational outcomes, and a lower probability of pursuing high-earning degrees such as those in STEM fields.
Interestingly, the research suggests that interventions to boost women’s workplace confidence may be insufficient, as much of the damage occurs earlier in life. The authors argue for earlier interventions targeting educational and career choices, pointing out that workplace-based confidence-building measures may come “too little, too late.”
This research adds a new dimension to understanding the gender wage gap, emphasizing that confidence—or the lack of it—plays a substantial role in shaping labor market outcomes.