Consumers—Especially Women—Avoid Buying From Firms With Higher Gender Pay Gaps

Abstract

We document a unique driver of consumer behavior: the public disclosure of a firm’s gender pay gap. Four experiments provide causal evidence that when firms are revealed to have gender pay gaps, consumers are less willing to pay for their goods, a reaction driven by consumer perceptions of unfairness. Unlike reactions to CEO‐to‐worker wage gaps, this effect varies by consumers’ gender: Compared to men, women show larger decreases in purchase intentions toward firms with gender pay gaps. Social media data, from before and after the United Kingdom legally mandated many firms to disclose their gender pay gaps, further demonstrate that gender pay gaps correlate with negative consumer reactions; once again, women are more likely than men to express negative sentiments online in response to pay gap‐related topics. Although we show that firms consumers will punish firms with their wallets, we also observe boundary conditions: When decisions incur a sufficient cost to the self—such as when needing a ride‐share when rain is very likely—the negative effects of gender gap disclosure are attenuated.