Abstract
There have been increased calls for pay transparency law across the developing world. Literature showed that pay transparency law has been shown to reduce pay inequality while others have found evidence of employees’ increasing idiosyncratic requests for non-transparent benefits. Yet, little is known how employers allocate between salary and the benefit when salary becomes transparent, and benefits remains to be non-transparent. In this paper, I would like to ask that when two workers are randomly assigned with unequal total compensation, and the employers have opportunities to allocate bonus between the two workers, how would the employers allocate the bonus. Would they allocate the bonus in a way so that the total compensation would equal, or would they allocate in a way so that the salary component would equal, or would they aim to equally split the bonus without changing any of the previous inequality in total compensation. Moreover, I would like to know whether their behavior is impacted by whether the allocated component (salary or benefit) is transparent. I am also interested to know whether the allocator's gender impacts their decisions.