The Quick Read
- A Swedish study found that stronger outside job opportunities were associated with higher pay in men’s existing jobs, but not with comparable wage growth for women.
- Women and men showed similar patterns of moving to another employer. The gap appeared in what happened before the move: men were more likely to benefit from renegotiation.
- The researchers estimate that gender differences in wage renegotiation could account for around half of the pay gap between comparable men and women within jobs.
- The study does not prove that women lack the ability to negotiate. It points towards differences in how workers use outside options and how employers respond to them.
- Employers can reduce the advantage associated with counteroffers by conducting regular pay reviews, publishing salary bands, and correcting pay before an employee threatens to leave.
There is a familiar moment in many careers. An employee receives an offer from another company, walks into a manager’s office, and says, “I would prefer to stay, but this offer is difficult to ignore.”
What follows can add thousands to a person’s annual earnings.
Yet using job offers for pay rises may not work equally for women and men. Research from economists Peter Fredriksson, Dogan Gülümser and Lena Hensvik suggests that men are more likely to convert an outside opportunity into higher pay without leaving their current employer. Women appear just as willing to change jobs. However, they do not receive the same wage gain while staying.
That difference may seem small when you look at it as just one salary conversation. Across several years, it can shape earnings, bonuses, pension contributions, future offers and the starting point for every negotiation that follows.
What did the study find about using job offers for pay rises?
The researchers examined how men’s and women’s wages responded when better employment opportunities became available outside their current workplace.
They used Swedish administrative data and an unusual research method. Instead of relying only on workers who reported having received a formal offer, the study traced external opportunities through family networks. It examined changes in hiring demand among companies that employ a worker’s parents or siblings. Strong family connections can carry information about openings and improve access to new jobs.
When those outside options strengthened, men experienced greater wage growth in their existing jobs. Women did not see a comparable increase.
The difference was not explained by men gaining access to better-quality opportunities. The study was designed to compare opportunities of similar quality across genders. Men and women were also similarly likely to change employers once an outside option emerged.
The separation occurred inside the existing workplace.
A man with another option was more likely to receive higher pay and remain. A woman facing a similar opportunity was more likely to move without first gaining the same financial benefit from her current employer.
The researchers interpret this as evidence of a gender difference in wage renegotiation. Their model estimates that renegotiation behaviour may explain around half of the gender pay gap among workers doing comparable work within the same organisation.
That estimate deserves attention, but also caution. The paper is a discussion paper and has not been peer-reviewed at the time of publication. Its findings come from Sweden and cannot automatically be transferred to every country, sector or workplace. The research nevertheless exposes a mechanism that many pay-gap discussions overlook.
The advantage is not only getting another job
Career advice usually presents an external offer as an exit route.
A better employer offers more money. The employee resigns. The move produces a salary increase.
This study highlights a second route: An employee can use the possibility of leaving to extract more value from the job already held.
That route carries several advantages. The employee keeps existing relationships, reputation and institutional knowledge. There is no probation period, relocation or uncertainty about a new manager. The higher salary may arrive without the disruption of a job change.
For the employer, the calculation is equally practical. Replacing an experienced worker can take time and money. A counteroffer may seem cheaper than recruiting and training someone new.
Employees who are comfortable putting an outside option on the table can therefore access wage growth not available through the annual appraisal alone.
When men use this channel more effectively, their pay can rise even when their job title, employer and visible responsibilities remain unchanged.
That helps explain why two people who begin in comparable roles may gradually move apart financially.
Are women simply negotiating less?
That conclusion would be too easy.
Research on women and negotiation does not support one neat story. Some studies have found that women negotiate as often as men. Others have found differences in the amount requested, the setting in which people negotiate or the results they receive.
Recent research covered by Change in Content found that women and men can achieve similar economic results in negotiations, while women may leave their counterparts with greater trust and satisfaction. Negotiation ability is, therefore, not the obvious weakness.
The more useful question is whether women see an outside offer as a bargaining tool, and whether using it carries the same perceived risk.
A woman may have several reasons to avoid a threatening departure.
She may value a flexible arrangement that is difficult to reproduce elsewhere. She may depend on a manageable commute, predictable hours or a trusted team. Sometimes she worries that disclosing another offer will damage her relationship with her manager. She may also believe that once she signals an intention to leave, her loyalty will remain under suspicion even if she accepts a counteroffer.
The study’s economic model accounts for differences in job preferences and the personal cost of renegotiation. It notes that commute constraints and family commitments can shape women’s work choices. It may narrow the range of outside options they can credibly pursue.
Another possibility deserves equal attention: Employers may not react in the same way.
An assertive male employee may be interpreted as commercially aware or ambitious. A woman using the same leverage may be regarded as disloyal, demanding or already halfway out of the door. Decades of workplace research have shown that self-advocacy can have different social consequences depending on who does it.
The wage gap may therefore arise from an interaction between employee behaviour and employer judgement. Reducing the problem to women’s confidence would place the entire responsibility on the person receiving less.
Why can staying create a larger pay gap?
Job switching is widely regarded as one of the fastest ways to increase earnings. But repeated counteroffers can produce a quieter advantage.
Consider two colleagues earning the same amount.
Both attract interest from another employer. The man takes the offer to his manager and receives a 10% increase to stay. The woman accepts the external role and also receives a 10% increase.
Initially, their gains appear equal. The man, however, retains his tenure, internal network and position in the promotion queue. His employer now knows that the market values him more highly. The woman must establish herself in a new organisation and may spend several months proving her value again.
Two years later, the man uses another outside conversation to renegotiate. The woman moves only when she is prepared to change her entire working environment. The difference compounds.
It does not make staying inherently better than leaving. A new employer may provide a better role, a stronger culture or a much larger increase. Counteroffers can also fail to resolve the reason an employee began looking elsewhere.
The point is that men may have access to one more pay-setting route. They can move for better pay, or use the possibility of moving to improve their current deal. Women who move at similar rates but renegotiate less effectively have fewer opportunities to reset their earnings.
That finding sits alongside a wider pattern. Women in India’s largest cities are increasingly entering regular salaried work, yet men still earn considerably more in the same urban labour markets. Entry into formal employment does not, by itself, produce equal financial progress.
Should women use external offers as leverage?
A genuine outside offer can strengthen a salary discussion. It provides evidence that another organisation values the employee at a higher level. However, using it requires preparation.
Make sure the alternative is real
An expression of interest, an informal recruiter call and a written offer are not equivalent.
Before approaching the current employer, the employee should understand the proposed salary, responsibilities, working model, benefits, location and joining conditions. She should also be prepared to accept the job should her employer decline to negotiate.
An offer used only as a bluff can quickly reduce trust.
Decide what would make staying worthwhile
The conversation should not begin with “Match this or I leave” unless departure is already certain.
A stronger approach identifies what has to change. That may include salary, title, role scope, reporting line, flexibility, resources or a defined promotion timeline.
Money may start the discussion, but an unresolved workplace problem can remain after a counteroffer.
Present market evidence, not an apology
Women often enter salary discussions by softening the request before making it. A clearer framing would be:
“I have received an offer at this level. My preference is to continue here because I value the work and the team. However, the difference in compensation is substantial. Can we review my salary and role against my current contribution and the external market?”
The statement is direct without becoming theatrical. It gives the employer a decision to make.
Ask what happens after the counteroffer
A pay rise can solve the immediate gap while leaving future progression unclear.
Employees should ask whether the increase changes their pay band, when compensation will next be reviewed and whether the counteroffer affects bonus or promotion eligibility.
The aim is not merely to win one conversation. It is to understand the new career position.
Women should also resist the temptation to treat the need to negotiate as proof that they personally failed. The confidence gap at work is often reinforced by vague feedback, unequal recognition and uncertainty about what comparable colleagues earn. Better information changes what people feel entitled to request.
Why counteroffer culture is a problem for employers
An organisation that pays people fairly only after they threaten to leave is rewarding access to alternatives rather than contribution.
The most connected, mobile and negotiation-ready employees receive corrections. Others continue to be underpaid despite doing work of similar value.
That approach can reproduce several inequalities:
- Employees with stronger professional networks hear about more opportunities.
- Workers with fewer caregiving obligations can pursue jobs that involve longer commutes or relocation.
- People who can tolerate financial uncertainty are more comfortable risking a refusal.
- Employees who are judged positively for assertiveness can negotiate more forcefully.
- Those who need flexibility or stability may be reluctant to disturb an imperfect but workable arrangement.
Women are more likely to encounter several of these constraints at once.
Counteroffers can also create distorted salary structures. A manager may receive emergency approval to retain one employee while lacking the budget to correct comparable colleagues. The person willing to leave is rewarded; the person who remains committed is financially overlooked.
Over time, loyalty becomes expensive for the employee and convenient for the employer.
What should organisations do differently?
A Change in Content is not merely women’s responsibility. Organisations need to come up as well.
Review pay before resignation becomes likely
Regular pay-equity audits can identify unexplained differences between employees performing comparable work.
Reviews should examine base pay, bonuses, promotion increases, retention payments and the frequency of counteroffers. Looking only at starting salaries will miss gaps created later.
Publish salary ranges internally
Employees should not need another company’s offer to learn what their current role is worth.
Transparent bands make salary discussions less dependent on private information and individual bargaining confidence. They also help managers explain why employees sit at different points within a range.
Examine counteroffers by gender
Companies commonly track resignations but pay less attention to who receives a counteroffer and how large it is.
HR teams should ask:
- Who is invited to renegotiate?
- Whose first resignation is accepted immediately?
- Are men receiving larger retention increases?
- Do women leave at similar rates when they are not offered reasons to stay?
- Does the organisation reward employees who arrive with outside leverage more than those who raise pay concerns directly?
The answers may reveal a pay-setting system that looks neutral but produces uneven results.
Give managers clear authority and guidance
Some managers assume that an employee mentioning another offer has already decided to leave. Others negotiate instinctively and inconsistently.
A defined process can reduce personal interpretation. Managers should know when a pay review is appropriate, what evidence is required and how to avoid making judgements about loyalty based on gendered expectations.
Correct pay, not only confidence
Negotiation workshops can help women prepare. Mentoring and access to market information can also strengthen their position.
Those interventions should support systemic reform, not replace it.
The pay gap among women freelancers offers a useful warning. Telling women to ask for more does little when pricing is opaque, bargaining power is unequal, and clients expect women to accept less. Employment systems can reproduce the same problem when salary growth depends heavily on private negotiation.
The Change Ahead
A job offer can reveal what the market is willing to pay. It can also reveal what an existing employer was willing not to pay until the employee gained the power to leave.
The new study adds an important gender dimension. Men and women may both find new opportunities. Men appear more likely to bring those opportunities back into the workplace and convert them into higher earnings.
Women can learn from that route. A credible alternative should not be hidden when it can support a fair discussion about pay. Yet the greater responsibility lies with employers.
A sound compensation system should not wait for a resignation letter to recognise a person’s value. When external leverage becomes the fastest path to fair pay, the employees best able to use it will keep moving ahead.
Pay equity depends on what happens long before someone places another company’s offer on the table.
Editorial Note and Sources
This article is based primarily on a 2025 RFBerlin discussion paper by Peter Fredriksson, Dogan Gülümser and Lena Hensvik. The research uses Swedish administrative data and family-network measures to study how outside employment opportunities affect wage growth and job mobility. The paper was preliminary and had not been peer-reviewed at the time of publication. Its findings should not be interpreted as applying uniformly to all workers, countries or organisations. This article offers editorial analysis and general workplace information; it is not legal, employment, financial or compensation advice.
Sources used
- RFBerlin: Outside Job Opportunities and the Gender Gap in Pay
- RFBerlin Discussion Paper No. 71/25: Full research paper by Peter Fredriksson, Dogan Gülümser and Lena Hensvik
- Centre for Economic Policy Research: DP20638: Outside Job Opportunities and the Gender Gap in Pay
