The Influence of Pay Transparency on Inequity, Inequality, and the Performance-Basis of Pay in Organizations

Tomasz Obloj and Todd Zenger
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Tomasz Obloj: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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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 novel data set 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.

Keywords: Transparency; Gender Pay Gap; Incentives (search for similar items in EconPapers)
Date: 2020-07-10
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-02896651

DOI: 10.2139/ssrn.3523828

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