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Pay transparency and entrepreneurship

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  • Shang, Longfei
  • Saffar, Walid

Abstract

Using the staggered adoption of U.S. state-level pay transparency laws that improve pay transparency, we find that the probability of high-wage workers becoming entrepreneurs significantly increases following the adoption of such laws. Moreover, the salaries of high-wage workers significantly increase following the laws’ passage. These findings are consistent with theory suggesting that improved pay transparency increases the relative return of entrepreneurship for high-wage workers.

Suggested Citation

  • Shang, Longfei & Saffar, Walid, 2024. "Pay transparency and entrepreneurship," Journal of Banking & Finance, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:jbfina:v:162:y:2024:i:c:s0378426624000487
    DOI: 10.1016/j.jbankfin.2024.107128
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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