Professor of Economics
Government-mandated reporting of gender pay discrepancies has been a subject of much debate in the last 5-10 years. Those arguing for this legislation argue that it will help to address the persistent gender wage gap. Opponents insist that not only is that unlikely; it will also increase companies’ administrative burden and decrease profits. Until recently there has been no strong evidence to support either side.However, researchers have just conducted the first empirical study on the impact of mandatory wage transparency. That study’s results suggest that disclosing disparities in gender pay does in fact narrow the gender wage gap.The results showed that from 2003 to 2008, the gender pay gap at mandatory reporting firms shrank 7%, from 18.9% to 17.5%, while the gap at control firms stayed steady at 18.9%. This improvement came without a negative effect on firms’ net income.