How does “salary transparency” affect job seekers and companies? This report explores lessons from recent economic research on how workplace transparency affects labor markets in three key areas:
- Job Search: How does company transparency affect the way workers and companies find each other?
- Pay Negotiation: How does salary transparency affect the way new employees negotiate over salary and benefits?
- On-the-Job Performance: Are employees in more transparent companies more productive? Are they more engaged?
Effects on Job Searching
- Studies find better access to job information can encourage smarter job searching, help improve the quality of job matches, and may lead to shorter unemployment spells for workers.
- Providing more information to job seekers about job application processes improves the diversity of applicant pools by boosting the number of female job applicants.
Impact on Pay Negotiation
- Salary transparency helps expose pay gaps between otherwise similar workers, encouraging underpaid employees to renegotiate or move to better-fitting jobs, improving overall efficiency in labor markets.
- Men are more likely to negotiate salary than women. But studies show this “negotiation gap” disappears when information about other job applicants’ negotiation experience is public information.
- While the literature on productivity and salary transparency is mixed, most studies find employees are more productive and engaged when pay structures are transparent and predictable.