Gender Wage Gap – Is Pay Transparency the Answer?

Abstract

Women earn 77 cents for every dollar earned by their male counterparts (DeGette and Sanders, 2012). Although women are afforded more professional opportunities than ever before in history, the reality is that they still earn less than men. The reason behind this difference is the Gender Wage Gap. Though there are a lot of mixed factors contributing to the Gender Wage Gap, pay secrecy has been found to be one of the main reasons for the Gender Wage Gap. If, on the other hand, there was transparency, everyone would know their colleagues’ pay, and any kind of bias in pay would be evident. The organization would be forced to make appropriate decisions regarding the pay discrepancy. Many studies advocate that pay transparency can help close the wage gap (Elesser and Childers, 2018). The literature also highlights that the availability of pay comparison information keeps organizations honest in making pay decisions (Elesser, 2018). Pay secrecy indirectly affects pay satisfaction and the quality of work (Gaertner and Brinkman, 2018). When employees assume they might not be getting paid as much as someone else, they tend to decrease their job performance (Belogolovsky, 2016). This paper concentrates on how the disclosure of pay information acts as a key resource that reduces information asymmetry and helps with closing the Gender Wage Gap. The paper also discusses the factors that cause the Gender Wage Gap and the pros and cons of pay transparency.