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

Does giving workers more information on wages help eliminate wage differentials? We leverage a recent law passed in Colorado requiring employers to list the expected wages in job listings to study this question. Using a synthetic control approach, we find no causal evidence of a reduction in the gender gap in Colorado. On the contrary, our analysis suggests that the gender pay gap between men and women increased in Colorado after passage of the law, although this finding is not significant at the 5% level using placebo tests. We conduct additional correlational analysis on potential mechanisms through which the law could have impacted the gender pay gap (directed search, bargaining, and signal informativeness). Overall, our correlational evidence is consistent with male workers taking more advantage of the increased transparency in postings than female workers, which could have had an adverse effect on the policy’s capacity to reduce the gender gap. Our paper highlights the importance of ensuring information policy is properly targeted to its intended beneficiaries.