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The influence of pay transparency on (gender) inequity, inequality and the performance basis of pay

Author

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  • Tomasz Obloj

    (HEC Paris)

  • Todd Zenger

    (University of Utah)

Abstract

Recent decades have witnessed a growing focus on two distinct income patterns: persistent pay inequity, particularly a gender pay gap, and growing pay inequality. Pay transparency is widely advanced as a remedy for both. Yet we know little about the systemic influence of this policy on the evolution of pay practices within organizations. To address this void, we assemble a dataset combining detailed performance, demographic and salary data for approximately 100,000 US academics between 1997 and 2017. We then exploit staggered shocks to wage transparency to explore how this change reshapes pay practices. We find evidence that pay transparency causes significant increases in both the equity and equality of pay, and significant and sizeable reductions in the link between pay and individually measured performance.

Suggested Citation

  • Tomasz Obloj & Todd Zenger, 2022. "The influence of pay transparency on (gender) inequity, inequality and the performance basis of pay," Nature Human Behaviour, Nature, vol. 6(5), pages 646-655, May.
    • Handle: RePEc:nat:nathum:v:6:y:2022:i:5:d:10.1038_s41562-022-01288-9
    DOI: 10.1038/s41562-022-01288-9
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    Citations

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    Cited by:

    1. Amir Habibi, 2023. "Pay Transparency in Organizations," Rationality and Competition Discussion Paper Series 395, CRC TRR 190 Rationality and Competition.
    2. Maurice Dunaiski & Janne Tukiainen, 2023. "Does income transparency affect support for redistribution? Evidence from Finland's tax day," Discussion Papers 159, Aboa Centre for Economics.
    3. Elizabeth Lyons & Laurina Zhang, 2023. "Salary transparency and gender pay inequality: Evidence from Canadian universities," Strategic Management Journal, Wiley Blackwell, vol. 44(8), pages 2005-2034, August.
    4. Bennedsen, Morten & Larsen, Birthe & Wei, Jiayi, 2022. "Wage Transparency and the Gender Pay Gap: A Survey," Working Papers 17-2022, Copenhagen Business School, Department of Economics.
    5. Karl Aschenbrücker & Tobias Kretschmer, 2022. "Performance-based incentives and innovative activity in small firms: evidence from German manufacturing," Journal of Organization Design, Springer;Organizational Design Community, vol. 11(2), pages 47-64, June.
    6. Cory Koedel & Trang Pham, 2023. "The Narrowing Gender Wage Gap Among Faculty at Public Universities in the U.S," SAGE Open, , vol. 13(3), pages 21582440231, August.
    7. Julien Picault, 2023. "A strategic approach to managerial compliance with equal pay policies," SN Business & Economics, Springer, vol. 3(8), pages 1-21, August.

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