Zsofia Barany discussion of: Pay transparency

Abstract

The drivers of the gender wage gap and policies that could help reduce it are key issues and are widely researched. This paper analyses whether, when access to justice in cases of pay discrimination is easy, pay transparency can help reduce the unexplained component of the gender gap. On the one hand, pay transparency helps establish whether the pay workers’ receive is fair, and if access to justice is easy, workers could rectify any discrimination and thereby close gender gaps. This direct mechanism can lead to smaller gender gaps ex ante, as employers want to avoid the costs of litigation. On the other hand, pay transparency can lead to resentful employees, which can result in lower productivity and higher turnover. It can also lead to increased litigation, and providing transparent information about pay within a company can be costly. Therefore, the overall effect of these policies can in general be ambiguous.