Pay Transparency, Negotiation, and Employer Demand

Many jurisdictions now require employers to disclose expected compensation in job advertisements. While evidence suggests that such pay transparency can reduce labor market disparities, little is known about the underlying mechanisms, especially regarding how pay transparency affects recruiters’ perceptions and the demands of negotiating candidates.  Economists Taeho Kim and Clémentine Van Effenterre will investigate how recruiters evaluate candidates who negotiate for higher pay, how this varies by a candidate’s gender and with pay transparency. They will conduct a two-sided audit field experiment where they assume the employer’s role and hire 400 actual recruiters from Upwork to screen fictitious job applications, varying the intensity of salary negotiation, and whether the salary range was posted in the advertisement. Preliminary results indicate that recruiters interpret ask salaries differently based on gender, and that pay transparency reduces the informational value and pay differential of this signal.