Do Workers Benefit from Wage Transparency Rules?

54 Pages Posted: 19 Jul 2021 Last revised: 29 Mar 2023

See all articles by Oliver Gürtler

Oliver Gürtler

University of Cologne

Lennart Struth

University of Cologne

Date Written: March 28, 2023

Abstract

Wage transparency rules arguably enable workers better to assess their contribution to firm value, allowing them to make wage demands that more accurately reflect their value for the employing firm. This paper contains a formal analysis of transparency rules and their effects on wages. We find that these rules induce firms to behave strategically with the aim of manipulating the information workers receive. We identify a large class of rules that yield an identical equilibrium outcome. For productivity distributions with decreasing (increasing) hazard rate, transparency rules increase (potentially decrease) workers’ payoff.

Keywords: wage-setting, transparency rule, payoff, strategic effect, learning effect

JEL Classification: J31, J71, K31, M51

Suggested Citation

Gürtler, Oliver and Struth, Lennart, Do Workers Benefit from Wage Transparency Rules? (March 28, 2023). Available at SSRN: https://ssrn.com/abstract=3888119 or http://dx.doi.org/10.2139/ssrn.3888119

Oliver Gürtler (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Lennart Struth

University of Cologne

Albertus-Magnus-Platz
Cologne, 50923
Germany

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