Combating Inequality with Transparency? Evidence from Colorado (with Thomas Fullagar)

Does increasing wage transparency effectively reduce pay disparities? We address this question by examining the impact of Colorado’s Equal Pay for Equal Work Act, a pioneering statewide policy mandating that employers disclose salary ranges in all job postings. Employing a synthetic control method to compare Colorado’s experience with a carefully constructed counterfactual, we find no evidence that the law narrowed the gender earnings gap among newly hired workers. In fact, our estimates indicate a widening of approximately 15 percent, a statistically significant increase relative to the synthetic control. We perform additional correlational industry-level analysis, finding suggestive patterns consistent with gender differences in search or bargaining behavior. Our results highlight critical challenges in designing transparency policies and emphasize the necessity of ensuring that information interventions align closely with the behavioral responses of the intended beneficiaries.