Provide, Volunteer, Avoid, Refuse: Dynamics of Salary History Disclosure and Organizational Pay Inequality

• In Event: 21017 - Organizational Policies and Gender Inequality

Abstract

This paper advances the understanding of the gender pay gap and the role of information in reproducing organizational inequality. Past work has highlighted the importance of information disclosure or nondisclosure for organizational inequality, as nondisclosure leads employers to rely on biased heuristics, while disclosure can reproduce past injustices. To date, however, few studies consider how the organizational practices and interactions around information disclosure may shape inequality. We explore these questions in the context of the salary history ban. While a growing number of studies consider the impacts of the ban on the overall pay gap, existing research has been limited in its ability to answer questions about gender and interaction because of data limitations, as it is rare to find data that includes both employer- and employee-side negotiation behaviors as well as accurate information about employees’ salary history. Leveraging rich individual-level data from Payscale that includes multiple observations across different jobs, we show that obscuring information may be beneficial, especially to women, as employers try to recruit using “best guesses” about candidate’s reservation wages that average across men’s higher and women’s lower past pay. Yet the specific way in which information is disclosed or obscured matters: refusing to disclose generates the highest gains, but for women, the best strategy is to avoid the issue altogether. The results provide one possible explanation for the benefits of the salary history ban. Insofar as employers comply with the law and stop discussing salary history with candidates, women are likely to see the greatest wage gains.

Authors

• Laura Adler, Yale University

• Mai Dinh, Yale University