Wage Transparency

Marie Skłodowska-Curie Individual Fellowship "Wage transparency in companies"

Grant number: 745894

Project acronym: WAGETRANS

Overview

How much information about the wage structure should a company provide to its employees? Existing research in economics does not provide clear recommendations in this respect. Transparent information about the wages within a company may have a positive impact on employee satisfaction and motivation, because wage secrecy creates distrust and favours discriminatory practices. Yet, it is unclear whether the benefits of wage transparency are larger than the potential harm: Unequal wage profiles, if made transparent, trigger social comparisons among employees that may destroy work motivation and increase the likelihood of leaving the firm.

The goal of this project was to significantly enhance the understanding of the role of wage transparency as an element for incentive system design in two work packages that focus on the question how employers and employees manipulate and respond to the wage information in the company environment.

In work package 1 (NEGOTIATION), I analysed how transparency affects the wage negotiation process between employers and employees, the resulting wage profiles and subsequent working performance.

In work package 2 (NORMS), I studied how the prevailing social norm within the firm changes the impact of transparency on the wage structure and working motivation.