The Effectiveness of Pay Transparency Laws

Abstract

Governments around the globe have introduced various types of pay transparency laws with the aim of reducing the gender pay gap. Due to the heterogeneity of legislation and scattered academic evidence, it is difficult to draw general conclusions for policy and research. This article aims to answer whether and which pay transparency laws are effective in reducing the gender pay gap. Using a systematic review, it first provides a complete collection of pay transparency laws in the US and Europe. The laws are characterized in terms of whether they influence 1) pay communication transparency 2) pay outcome transparency, or 3) pay processes transparency. Second, the article systematically reviews the empirical literature evaluating pay transparency interventions and map these studies to the conceptual framework. The empirical research shows that pay transparency laws can be effective in reducing the gender pay gap. However, effectiveness depends on the type of pay transparency. Evidence on the underlying mechanisms is discussed. In addition, the article identifies laws that have not yet been researched and highlights laws that should be studied with particular urgency from a theoretical perspective.