Alice J. Lee (Cornell), Tae-Youn Park (SKKU), Sungyong Chang (Cornell)
In recent years, pay transparency laws have gained traction as a tool to combat gender pay gaps and promote equity. However, as one of my working papers reveals, not all transparency initiatives yield the expected results. This research delves into the nuanced effects of pay range transparency on job application preferences and salary negotiations, particularly between men and women.
The Promise and Peril of Pay Range Transparency
Pay range transparency requires employers to disclose a salary range for job postings, ostensibly to empower candidates with more information. However, the study highlights an unintended consequence: women tend to prefer narrower pay ranges compared to men. This preference, rooted in higher risk aversion, could have ripple effects on negotiation assertiveness and long-term earning potential.
Key Findings
1. Pay Range Size and Gendered Application Behavior: Across four studies, the researchers found that women are significantly more likely than men to apply for jobs with narrower pay ranges. This preference is shaped by women’s general tendency towards risk aversion.
2. Negotiation Dynamics: The narrower the pay range, the less assertive the negotiation behaviors observed. Women, who often opt for narrower ranges, may negotiate less aggressively, leading to potentially lower salary outcomes.
3. Organizational Gender Representation: Firms that advertise wider pay ranges tend to have fewer female employees. This suggests that pay range policies might influence not just individual outcomes but also organizational diversity.
Implications for Policy and Practice
While pay transparency is a step toward equity, these findings underscore the importance of considering how information is presented. Policymakers and organizations should aim for balance: providing transparency while mitigating the unintended effects of perceived risk and uncertainty. For instance, guidelines on optimal pay range sizes or accompanying transparency efforts with negotiation training for women could help bridge the gap.
Looking Forward
As the conversation around pay equity evolves, it’s crucial to examine how well-intentioned policies interact with human behavior. This research serves as a reminder that the path to equity requires both data transparency and thoughtful implementation.
What are your thoughts on pay transparency? Could these findings shape how your organization approaches salary disclosures? Let’s discuss!
Sungyong Chang 