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Pay transparency and cracks in the glass ceiling
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Duchini, Emma, Simion, Stefania and Turrell, Arthur (2020) Pay transparency and cracks in the glass ceiling. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1311). (Unpublished)
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Official URL: https://warwick.ac.uk/fac/soc/economics/research/w...
Abstract
This paper studies firms’ and employees’ responses to pay transparency requirements. Each year since 2018, more than 10,000 UK firms have been required to disclose publicly their gender pay gap and gender composition along the wage distribution. Theoretically, pay transparency is meant to act as an information shock that alters the bargaining power of male and female employees vis-` a-vis the firm in opposite ways. Coupled with the potential negative effects of unequal pay on firms’ reputation, this shock could improve women’s relative occupational and pay outcomes. We test these theoretical predictions using a difference-in-differences strategy that exploits variations in the UK mandate across firm size and time. This analysis delivers four main findings. First, pay transparency increases women’s probability of working in above-median-wage occupations by 5 percent compared to the pre-policy mean. Second, while this effect has not yet translated into a significant rise in women’s pay, the policy leads to a 2.8 percent decrease in men’s real hourly pay, reducing the pre-policy gender pay gap by 15 percent. Third, combining the difference-in-differences strategy with a text analysis of job listings, we find suggestive evidence that treated firms adopt female-friendly hiring practices in ads for high-gender-pay-gap occupations. Fourth, a reputation motive seems to drive employers’ reactions, as firms publishing worse gender equality indicators score lower in YouGov Women’s Rankings. Moreover, publicly listed firms experience a 35-basis-point average fall in cumulative abnormal returns in the days following their publication of gender equality data.
| Item Type: | Working or Discussion Paper (Working Paper) | |||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor | |||||||||
| Divisions: | Faculty of Social Sciences > Economics | |||||||||
| Library of Congress Subject Headings (LCSH): | Pay equity , Wages -- Sex differences, Equal pay for equal work, Sex discrimination in employment , Glass ceiling (Employment discrimination) | |||||||||
| Series Name: | Warwick economics research papers series (WERPS) | |||||||||
| Publisher: | University of Warwick. Department of Economics | |||||||||
| Place of Publication: | Coventry | |||||||||
| ISSN: | 0083-7350 | |||||||||
| Official Date: | October 2020 | |||||||||
| Dates: |
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| Number: | 1311 | |||||||||
| Institution: | University of Warwick | |||||||||
| Status: | Not Peer Reviewed | |||||||||
| Publication Status: | Unpublished | |||||||||
| Access rights to Published version: | Open Access (Creative Commons) | |||||||||
| Description: | This paper also appears as CAGE Discussion paper 482 |
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| Date of first compliant deposit: | 12 March 2018 | |||||||||
| Date of first compliant Open Access: | 12 March 2018 | |||||||||
| RIOXX Funder/Project Grant: |
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