BY NOW, MOST PEOPLE ARE AWARE that women earn less money relative to men for the same work. What some may not know is that this gender pay gap is a pervasive pattern worldwide. One recent estimate suggests that comparing differences in average annual pay globally, women earn 57 per cent of what men make. This gender pay gap exists even at the highest levels of business as well: Female executives at S&P 1500 firms earn on average 45 per cent less than their male counterparts.
Researchers have explored several explanatory factors as to why the pay gap exists, ranging from ‘likelihood to negotiate,’ to ‘divisions of labour within a family,’ to a ‘lower likelihood of promotion.’ While there has been a longer-term trend towards reducing the pay gap in the U.S., Canada and other economically comparable nations, such progress has slowed since the 1990s.
In recent research with Tobias Schlager (University of Lausanne), Bhavya Mohan (University of San Francisco) and Michael Norton (Harvard Business School), we set out to determine how publicly released information about a firm’s gender pay gap might affect consumers. Our investigation was particularly timely as countries including Australia, Germany, Iceland, and the UK now compel firms to publicly disclose pay gap information. For example, since 2018, every UK company with over 250 employees must annually report the difference between their male and female employees’ average pay on a searchable database.
One assumption behind these mandated disclosure policies is that firms will feel pressure
