Wage Gap Disclosure in the Tropics

Pablo Castro, Mayara Felix, Ieda Matavelli and Bobak Pakzad-Hurson
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Pablo Castro: Federal University of Bahia
Mayara Felix: Yale University and NBER
Ieda Matavelli: University of New South Wales
Bobak Pakzad-Hurson: Brown University

No 2517, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We evaluate the effects of mandatory disclosures of firm-specific gender wage gaps in BrazilÑthe first developing country to enact a large-scale pay transparency law. The mandate took effect in 2023, automatically releasing to the public government-curated reports showing firm-specific gender wage gaps, separately by major occupational groups, for formal sector firms with 100 employees or more. Regression discontinuity estimates on outcomes one year after the release show that the mandated disclosures had no effects on the gender wage ratio, average wages for men or women, or the number of occupations within firms. We document that gender wage gaps persist in the formal sector as of year-end 2024, with women earning 10% less than men on average after conditioning on a flexible vector of observables, including hours worked, work experience, years of education, and occupation codes. Gender wage gaps increase with firm size for all occupational groups except production workers, which are male-dominated and have stronger union presence. Two major employer associations and a political party have challenged the legality of the policy at the Supreme Court, arguing that the mandated disclosures violate data protection rules, expose commercially sensitive wage data constituting trade secrets, conflict with existing labor legislation that permits legitimate wage differentials, and impose penalties without due process. We hypothesize two non-mutually-exclusive channels for the null effects: information frictionsÑworkers may not receive, understand, or find actionable the technical reportsÑand labor market frictionsÑworkers may be unable to act on information given limited outside options and high transition costs in Brazil's frictional labor market.

Date: 2026-04-13
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