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The Effect of Pay Transparency Laws on Wages and Discrimination Complaints

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  • Patrick Bennett
  • Ian Burn
  • Luke Walsh

Abstract

How can policymakers decrease wage gaps for groups covered by anti-discrimination legislation? In this paper, we show there is no impact of pay transparency laws on wages, while these policies lead to an increase in discrimination complaints. Using Current Population Survey (CPS) data we exploit the variation in US states that passed pay transparency laws between 1977 and 2021. We find no evidence of wage changes or changes in wage gaps for disadvantaged groups. However, using discrimination complaints filed with the Equal Employment Opportunity Commission (EEOC) between 2009 and 2021, we find the number of lawsuits filed due to workplace discrimination increases by 25-40%. Our findings establish that pay transparency legislation alone will not benefit workers, and that strong anti-discrimination laws are an important complement alongside pay transparency to increase equality.

Suggested Citation

  • Patrick Bennett & Ian Burn & Luke Walsh, 2023. "The Effect of Pay Transparency Laws on Wages and Discrimination Complaints," Working Papers 202312, University of Liverpool, Department of Economics.
    • Handle: RePEc:liv:livedp:202312
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    File URL: https://www.liverpool.ac.uk/media/livacuk/schoolofmanagement/docs/ECON,WP,202312,full.pdf
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    References listed on IDEAS

    as
    1. David Neumark & Roy J. Bank & Kyle D. Van Nort, 1996. "Sex Discrimination in Restaurant Hiring: An Audit Study," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 915-941.
    2. Gary Charness & Ramón Cobo-Reyes & Juan A. Lacomba & Francisco Lagos & Jose Maria Perez, 2016. "Social comparisons in wage delegation: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 433-459, June.
    3. repec:bla:ecinqu:v:51:y:2013:i:3:p:1779-1794 is not listed on IDEAS
    4. Zoe B. Cullen & Bobak Pakzad-Hurson, 2021. "Equilibrium Effects of Pay Transparency," NBER Working Papers 28903, National Bureau of Economic Research, Inc.
    5. Srikant Devaraj & Pankaj C. Patel, 2022. "State bans on pay secrecy and earnings: Evidence from the National Longitudinal Survey of Youth 1997," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 697-734, December.
    6. Gary Charness & Ramón Cobo-Reyes & Juan A. Lacomba & Francisco Lagos & Jose Maria Perez, 2016. "Social comparisons in wage delegation: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 433-459, June.
    7. Marlene Kim, 2015. "Pay Secrecy and the Gender Wage Gap in the United States," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 648-667, October.
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