Pay Transparency, Workplace Norms, and Gender Pay Gap

Book excerpt: We study the 2018 German Pay Transparency policy which allows employees in establishments with more than 200 workers, to ask their employers for information about the average earnings of their opposite-gender coworkers who do "equal work". Using an event study design and matched employer-employee data, we show that the policy had no discernible effects on male and female wages, thus leaving the gender wage gap unchanged. Using survey evidence, we further show that only 1% of men and 2.7% of women had asked their employers for information in the previous year. We find that workers were not willing to ask for information either because they believed that there was no significant gender pay gap at their workplaces or because they were apprehensive of hurting their "image". We argue that transparency, as enacted in Germany, placed an additional barrier to information access by requiring workers to seek out information instead of mandating firms to disclose data.