That’s what the evidence shows, yeah. Pay transparency benefits employers at the cost of high performers because they can credibly commit to not paying more. >

That’s what the evidence shows, yeah. Pay transparency benefits employers at the cost of high performers because they can credibly commit to not paying more. > Equilibrium effects of pay transparency in a simple labor market > Public discourse on pay transparency has not focused on equilibrium effects: how greater transparency impacts hiring and bargaining. To study these effects, we combine a dynamic wage-bargaining model with data from online markets for low-skill, temporary jobs that differ in their level of transparency. Wages are more equal, but lower under transparency. Transparency increases hiring and employer profits, rising 27% in an online field experiment. A key intuition is high transparency commits employers to negotiating aggressively, because a highly paid worker's salary affects negotiations with other workers. We discuss implications for the gender wage gap and employers' endogenous transparency choices. https://dl.acm.org/doi/abs/10.1145/3328526.3329645 https://dl.acm.org/doi/abs/10.1145/3328526.3329645 > Equilibrium effects of pay transparency > The discourse around pay transparency has focused on partial equilibrium effects: how workers rectify pay inequities through informed renegotiation. We investigate how employers respond in equilibrium. We study a model of bargaining under two‐sided incomplete information. Our model predicts that transparency reduces the individual bargaining power of workers, leading to lower average wages. A key insight is that employers credibly refuse to pay high wages to any one worker to avoid costly renegotiations with others. When workers have low individual bargaining power, pay transparency has a muted effect. We test our model with an event‐study analysis of U.S. state‐level laws protecting the right of private sector workers to communicate salary information with their coworkers. Consistent with our theoretical predictions, transparency laws empirically lead wages to decline by approximately 2%, and wage declines are smallest in magnitude when workers have low individual bargaining power. https://www.nber.org/system/files/working_papers/w28903/w28903.pdf https://www.nber.org/system/files/working_papers/w28903/w289...