Pay Transparency, Wage Inequality, and the Role of Collective Bargaining

Aspasia Bizopoulou, Elias Einiö and Tuomo Virkola

No 26252, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We study the impacts of firm-level pay transparency policy under different collective bargaining settings. We show that firms react to pay transparency requirements by reducing gender gaps, as intended by policy makers, but also by hiring fewer workers to lower-paid positions, which results in overall wage compression. Gender gap reductions are concentrated in firms under collective bargaining agreements, while hiring reductions and wage compression are concentrated in firms less exposed to collective bargaining, where employers have more discretion over individual wages. These results suggest that the effects of pay transparency on workplace inequality depend on labor market institutions.

Keywords: pay transparency; wage inequality; sorting; work satisfaction; discrimination; collective bargaining (search for similar items in EconPapers)
JEL-codes: J16 J31 J38 J52 (search for similar items in EconPapers)
Date: 2026-09
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