The Impact of Pay Transparency in Job Postings on the Labor Market
35 Pages Posted: 12 Aug 2022 Last revised: 18 Aug 2022
Date Written: August 9, 2022
In recent years, pay transparency in job postings has been proposed as one way to combat wage stagnation and reduce gender and racial wage gaps. However, there is limited empirical research on the impact of pay transparency in job postings on the labor market. While it may increase information to workers, potentially strengthening bargaining power, it also increases information to firms, potentially leading to tacit collusion in wage setting. The paper studies the impact of a January 2021 law in Colorado that required job postings to contain expected salary information. Using data from Burning Glass Technologies, we find that this law increased the fraction of postings with salary information by 30 percentage points, although there remains substantial non-compliance. For employers that posted salaries both before and after the policy, we find that posted salaries increased by about 3.6 percent, on average, following the policy.
Keywords: pay transparency, wages, labor economics
JEL Classification: J31, J38, J60
Suggested Citation: Suggested Citation