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Wage responses to gender pay gap reporting requirements

Author

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  • Blundell, Jack
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

Suggested Citation

  • Blundell, Jack, 2021. "Wage responses to gender pay gap reporting requirements," LSE Research Online Documents on Economics 114416, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:114416
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    File URL: http://eprints.lse.ac.uk/114416/
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    References listed on IDEAS

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    2. John Forth & Nikolaos Theodoropoulos & Alex Bryson, 2023. "The role of the workplace in ethnic wage differentials," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 259-290, June.
    3. Ransmayr Juliane & Weichselbaumer Doris, 2024. "The Role of Sex Segregation in the Gender Wage Gap Among University Graduates in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 244(1-2), pages 37-81, February.
    4. Wolfgang Frimmel & Bernhard Schmidpeter & Rene Wiesinger & Rudolf Winter-Ebmer, 2022. "Mandatory Wage Posting, Bargaining and the Gender Wage Gap," Economics working papers 2022-02, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Julien Picault, 2023. "A strategic approach to managerial compliance with equal pay policies," SN Business & Economics, Springer, vol. 3(8), pages 1-21, August.

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    More about this item

    Keywords

    gender pay gap; gender pay gap reporting; transparency; discrimination; information; public policy;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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