Is Salary Transparency More Than a Trend? Lessons from Economic Research

April 28, 2015

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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?

Key Findings

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.

On-the-Job Performance

  • 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.