Do Consumers Care About Gender Pay Gap Disclosure? Evidence from Foot Traffic

Abstract

We investigate whether the disclosure of gender pay information leads consumers to change their purchasing decisions. Using the U.K.'s 2017 mandatory gender pay disclosure regulation, combined with high-frequency foot traffic data to individual retail outlets, we show that foot traffic increases to U.S. outlets of firms required to disclose gender pay practices. Consumers reduce visits to firms reporting the highest gaps and reward firms reporting the lowest gaps with more visits, even if the company reports a pay gap unfavorable to women. Local demographic or workforce characteristics like the relative number of women or women in the labor force do not strengthen this baseline effect. Instead, increases in foot traffic are larger in localities with social norms favoring gender equality. Localities with well-educated consumers are more likely to be skeptical of firms reporting low pay gaps and "see through" misreported data. These foot traffic patterns post-disclosure affect managerial decision-making. We document a feedback loop where changes to consumer behavior following disclosure impact firms' future pay practices. Abnormally low foot traffic is predictive of smaller future pay gaps. Collectively, these findings indicate that transparency and equity in pay distributions can serve as a differentiating factor in a firm's brand image. Likewise, our findings demonstrate the usefulness of regulations mandating disclosure of gender pay gaps in providing customers with information relevant to their decision-making.

Keywords: Gender Pay, Pay Gap, Pay Inequality, Consumer Response, Purchasing Decisions, ESG, ESG Disclosure

JEL Classification: J16, J08, J31, J38, J7, J8, K31, K38, D12