Is Pay Transparency Good? /
Cullen, Zoe B.
Is Pay Transparency Good? / Zoe B. Cullen. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31060 . - Working Paper Series (National Bureau of Economic Research) no. w31060. .
March 2023.
Countries around the world are enacting pay transparency policies to combat pay discrimination. 71% of OECD countries have done so since 2000. Most are enacting transparency horizontally, revealing pay between co-workers of similar seniority within a firm. While these policies have narrowed co-worker wage gaps, they have also lead to counterproductive peer comparisons and caused employers to bargain more aggressively, lowering average wages. Other pay transparency policies, without directly targeting discrimination, have benefited workers by addressing broader information frictions in the labor market. Vertical pay transparency policies reveal to workers pay differences across different levels of seniority. Empirical evidence suggests these policies can lead to more accurate and more optimistic beliefs about earnings potential, increasing employee motivation and productivity. Cross-firm pay transparency policies reveal wage differences across employers. These policies have encouraged workers to seek jobs at higher paying firms, negotiate higher pay, and sharpened wage competition between employers. We discuss the evidence on pay transparency's effects, and open questions.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Labor Economics Policies
Wage Level and Structure • Wage Differentials
Public Policy
Is Pay Transparency Good? / Zoe B. Cullen. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31060 . - Working Paper Series (National Bureau of Economic Research) no. w31060. .
March 2023.
Countries around the world are enacting pay transparency policies to combat pay discrimination. 71% of OECD countries have done so since 2000. Most are enacting transparency horizontally, revealing pay between co-workers of similar seniority within a firm. While these policies have narrowed co-worker wage gaps, they have also lead to counterproductive peer comparisons and caused employers to bargain more aggressively, lowering average wages. Other pay transparency policies, without directly targeting discrimination, have benefited workers by addressing broader information frictions in the labor market. Vertical pay transparency policies reveal to workers pay differences across different levels of seniority. Empirical evidence suggests these policies can lead to more accurate and more optimistic beliefs about earnings potential, increasing employee motivation and productivity. Cross-firm pay transparency policies reveal wage differences across employers. These policies have encouraged workers to seek jobs at higher paying firms, negotiate higher pay, and sharpened wage competition between employers. We discuss the evidence on pay transparency's effects, and open questions.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Labor Economics Policies
Wage Level and Structure • Wage Differentials
Public Policy