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Abstract
In this paper, I examine the effects of transparency in employers’ compensation policies on labor market outcomes. I exploit a 2017 nationwide legislation that occured in Peru, which forced firms to report gender-based wage statistics to the government, and create and communicate their compensation policies to the employees. Using a difference-in-differences design with exposure variation, I analyze the effects on labor market outcomes using matched employer-employee data, and the effects on firm outcomes using firm-level census data. I evaluate the effects of the first component of this reform using the share of female workers at the occupation-firm prior to the reform, and I find that switching from zero to 100% exposure decreases the earnings gap by approximately 3 log points. On the other hand, firms which were paying more dispersed wages for a given job adjusted by compressing wages. This had an opposing effect on the gender earnings gap. I find some evidence that these two forces come into play due to men reallocating across firms more so than women.
Figure 2: Gender gap across jobs with different female share
Citation
Corcuera, Paul. 2023. “Pay Transparency and Employer Compensation Policies.” Working Paper.