An article on the virtues of pay transparency in the NY Times publishes the salaries of all Times editors, reporters and columnists... just kidding. But it does report on recent research about the effects of pay transparency:
Breaking the Salary Sharing Taboo
Transparency about salaries can make workplaces more equitable, especially for women and people of color. Why are so few Americans willing to open up?
By Susan Dominus
The article mentions several academic studies
Here's one from a forthcoming paper
"About a decade ago, a naturally occurring social experiment took place in Norway that revealed how people react when they are given the opportunity to learn not just a co-worker’s income but the salary of every citizen in the country. Key information from tax returns in Norway has been public since the 19th century, available to anyone willing to wait in line at City Hall and scour tax records. But that understandable interest in other people’s finances became something of a national obsession in 2001, when newspapers first started making the information searchable online. By 2009, one newspaper offered an app — instantly one of the country’s most downloaded — that allowed Facebook users to see leader boards that ranked friends’ salaries from highest to lowest. The app also created maps that allowed users to see the pay of all their neighbors. In 2010, during the first week that the most recent year’s information became available, Norwegians were Googling “skattelister” — tax lists — more than “YouTube,” according to data analyzed by Ricardo Perez-Truglia, now an assistant professor of economics at the U.C.L.A. Anderson School of Management; during that same period, Norwegians were scanning other people’s income more often than they were checking the weather. There were anecdotal reports of students’ being bullied for their families’ poverty, and increasingly, officials became uncomfortable with what the head of the Norwegian Tax Administration called the “peeping Tom” phenomenon (the media called it “tax porn”). In 2014, the law changed so that individuals could still access this public information — but the person whose information they were seeking would know who sought it. Salary searches plummeted, suggesting that Norwegian taboos around discussing pay are not, in the end, all that different from those in America.
Perez-Truglia realized he could use the case of the skattelister to determine the effect of that short window of widespread transparency on well-being, using data from a happiness survey that has been conducted in Norway since 1985. Perez-Truglia found that the newfound accessibility of other people’s pay led to a significant increase in the happiness gap: Higher-income earners were happier than they were before the information was widely available, and lower-income workers were less happy. (There was no change in happiness levels in the survey respondents with more limited access to the internet, further evidence that it was the availability of the skattelister that was having an influence on the survey results.)"
and here's the paper:
[Perez-Truglia, R. (2019). The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment. American Economic Review, forthcoming. [ Ungated] [ Slides]]
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Here's a link and an earlier post about another of the papers mentioned in the article,
Breaking the Salary Sharing Taboo
Transparency about salaries can make workplaces more equitable, especially for women and people of color. Why are so few Americans willing to open up?
By Susan Dominus
The article mentions several academic studies
Here's one from a forthcoming paper
"About a decade ago, a naturally occurring social experiment took place in Norway that revealed how people react when they are given the opportunity to learn not just a co-worker’s income but the salary of every citizen in the country. Key information from tax returns in Norway has been public since the 19th century, available to anyone willing to wait in line at City Hall and scour tax records. But that understandable interest in other people’s finances became something of a national obsession in 2001, when newspapers first started making the information searchable online. By 2009, one newspaper offered an app — instantly one of the country’s most downloaded — that allowed Facebook users to see leader boards that ranked friends’ salaries from highest to lowest. The app also created maps that allowed users to see the pay of all their neighbors. In 2010, during the first week that the most recent year’s information became available, Norwegians were Googling “skattelister” — tax lists — more than “YouTube,” according to data analyzed by Ricardo Perez-Truglia, now an assistant professor of economics at the U.C.L.A. Anderson School of Management; during that same period, Norwegians were scanning other people’s income more often than they were checking the weather. There were anecdotal reports of students’ being bullied for their families’ poverty, and increasingly, officials became uncomfortable with what the head of the Norwegian Tax Administration called the “peeping Tom” phenomenon (the media called it “tax porn”). In 2014, the law changed so that individuals could still access this public information — but the person whose information they were seeking would know who sought it. Salary searches plummeted, suggesting that Norwegian taboos around discussing pay are not, in the end, all that different from those in America.
Perez-Truglia realized he could use the case of the skattelister to determine the effect of that short window of widespread transparency on well-being, using data from a happiness survey that has been conducted in Norway since 1985. Perez-Truglia found that the newfound accessibility of other people’s pay led to a significant increase in the happiness gap: Higher-income earners were happier than they were before the information was widely available, and lower-income workers were less happy. (There was no change in happiness levels in the survey respondents with more limited access to the internet, further evidence that it was the availability of the skattelister that was having an influence on the survey results.)"
and here's the paper:
[Perez-Truglia, R. (2019). The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment. American Economic Review, forthcoming. [ Ungated] [ Slides]]
***********
Here's a link and an earlier post about another of the papers mentioned in the article,
Cullen, Zoë B., and Bobak Pakzad-Hurson. "Equilibrium Effects of Pay Transparency in a Simple Labor Market." Working Paper, April 2019. (Formerly two papers, "Equal Work for Unequal Pay" and "Is Pay Transparency Good?" Selected as Exemplary Applied Modeling Paper at EC '19.)
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