Wage responses to gender pay gap reporting requirements

Jack Blundell

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper I study a policy in which employers are required to publicly report gender pay gap statistics. Proponents argue that increasing the information available to workers and consumers places pressure on firms to close pay gaps, but opponents argue that such policies are poorly targeted and ineffective. This paper contributes to the debate by analyzing the UK’s recent reporting policy, in which employers are mandated to publicly report simple measures of their gender pay gap each year. Exploiting a discontinuous size threshold in the policy’s coverage, I apply a difference-in-difference strategy to linked employer-employee payroll data. I find that the introduction of reporting requirements led to a 1.6 percentage-point narrowing of the gender pay gap at affected employers. This large-magnitude effect is primarily due to a decline in male wages within affected employers, and is not caused by a change in the composition of the workforce. To explain this effect, I propose that a worker preference against high pay gap employers induces the closing of pay gaps upon information revelation. Newly-gathered survey evidence shows that female workers in particular exhibit a significant preference for low pay gap employers. In a hypothetical choice experiment, over half of women accept a 2.5% lower salary to avoid a high pay gap employer. I also demonstrate substantial heterogeneity in the interpretation of pay gap statistics across workers, and show that this affects

Keywords: gender pay gap; gender pay gap reporting; transparency; discrimination; information; public policy (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 77 pages
Date: 2021-03-05
New Economics Papers: this item is included in nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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