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The influence of pay transparency on inequity, inequality, and the performance-basis of pay in organizations

Author

Listed:
  • Obloj, Tomasz

    (HEC Paris)

  • Zenger, Todd

    (University of Utah)

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 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.

Suggested Citation

  • Obloj, Tomasz & Zenger, Todd, 2020. "The influence of pay transparency on inequity, inequality, and the performance-basis of pay in organizations," HEC Research Papers Series 1359, HEC Paris.
    • Handle: RePEc:ebg:heccah:1359
    DOI: 10.2139/ssrn.3523828
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    More about this item

    Keywords

    Transparency; Gender Pay Gap; Incentives;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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