Does Transparency Lead to Pay Compression?

Alexandre Mas

No 20558, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper asks whether pay disclosure in the public sector changes wage setting at the top of the public sector distribution. I examine a 2010 California mandate that required municipal salaries to be posted online. Among top managers, disclosure led to approximately 7 percent average compensation declines, and a 75 percent increase in their quit rate, relative to managers in cities that had already disclosed salaries. The wage cuts were largely nominal. Wage cuts were larger in cities with higher initial compensation, but not in cities where compensation was initially out of line with (measured) fundamentals. The response is more consistent with public aversion to high compensation than the effects of increased accountability.

JEL-codes: J01 J31 J45 J63 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-lab and nep-lma
Note: LS
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Citations: View citations in EconPapers (2)

Published as Alexandre Mas, 2017. "Does Transparency Lead to Pay Compression?," Journal of Political Economy, vol 125(5), pages 1683-1721.

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Related works:
Journal Article: Does Transparency Lead to Pay Compression? (2017)
Working Paper: Does Transparency Lead to Pay Compression? (2014)
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