Gender pay differences may shrink under transparency laws, study finds

Large-scale adoption of pay transparency laws could reduce persistent pay disparities between men and women, according to a National Bureau of Economic Research working paper.

For the study, researchers from Princeton (N.J.) University, the University of Toronto in Canada, and Memorial University of Newfoundland examined how public sector salary disclosure laws affected university faculty salaries in Canada. The researchers analyzed data from Canada's national statistical agency that contained salaries, demographic characteristics and job-related variables of academic employees.

Generally, the researchers found the gender pay gap between men and women fell by about 30 percent under Canadian laws that require disclosure of faculty salaries above thresholds ranging between $50,000 and $125,000. The researchers also found salary disclosure laws had a greater effect on gender pay gaps at universities that were unionized.

"On balance, the findings from our study suggest that large-scale adoption of pay transparency does have the potential to reduce gender differences in pay," the study authors wrote in an article for the Harvard Business Review. "Though our analysis is limited to relatively high-paid faculty in public universities, we believe that it is possible that wider adoption of transparency laws could bring about broader change in social norms that favor gender equality, and indirectly affect the pay gap (even in organizations that aren't required to disclose salaries)."

Access the NBER working paper here

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