Pay Transparency, Negotiation, and Employer Demand

Last registered on May 13, 2024
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Pre-Trial

Trial Information

General Information

Title
Pay Transparency, Negotiation, and Employer Demand
RCT ID
AEARCTR-0012700
Initial registration date
May 12, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
May 13, 2024, 12:42 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Taeho Kim
Affiliation
University of Chicago
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Other Primary Investigator(s)

PI Name
Brighton Chotiputsilp
PI Affiliation
Erasmus University Rotterdam
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PI Name
Clémentine Van Effenterre
PI Affiliation
University of Toronto
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Additional Trial Information

Status
In development
Start date
2024-05-08
End date
2025-12-31
Keywords
Gender, Labor
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Pay transparency policies have become increasingly prevalent in recent years, holding the potential to foster a more equitable and inclusive labor market. However, our understanding of the mechanisms through which these policies operate, particularly in the context of negotiation dynamics between candidates and employers, remains limited due to a lack of real-world data on negotiation processes (Cullen, 2023). In this project, we aim to fill this important gap in the literature by directly studying employer demand and their decision-making regarding candidates who negotiate, and how this dynamic changes under the influence of pay transparency laws. Pay transparency laws can limit firms' flexibility in negotiating salaries with candidates. When the salary range is made public, firms may exhibit a reduced willingness to negotiate due to anticipated broader re-negotiations, concerns regarding fairness, or recognition of candidates strategically navigating the job market armed with more information. Conversely, employers may explore alternative methods to compensate candidates, such as offering non-salary benefits or promoting them to higher positions with higher salary ranges. We will also investigate these firm responses based on the gender of candidates, as negotiation behaviors can be perceived as signals of candidate attributes, which may vary by gender.
Our project aims to address this gap in knowledge by investigating the following questions:
Without pay transparency, how do employers' compensation decisions vary based on the gender of candidates during negotiations?
What impact does pay transparency have on employers' compensation decisions during salary negotiations?
How does the effect of pay transparency on employers' compensation decisions vary by the gender of the candidate?

External Link(s)

Registration Citation

Citation
Chotiputsilp, Brighton, Taeho Kim and Clémentine Van Effenterre. 2024. "Pay Transparency, Negotiation, and Employer Demand." AEA RCT Registry. May 13. https://doi.org/10.1257/rct.12700-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
We propose a field experiment conducted in a real-world labor market setting to investigate employers' perceptions of negotiating candidates during the hiring stage, and how that changes when there is pay transparency.
Intervention Start Date
2024-05-08
Intervention End Date
2024-09-08

Primary Outcomes

Primary Outcomes (end points)
Our primary outcomes include recruiters’ salary offers, offers of non-salary benefits, and recommendation of continued negotiation.
Primary Outcomes (explanation)
Non salary benefits are using categorical variables on a 4-point scale. Qualitative assessments of skills are measured using categorical variables on a 4-point scale for each skill.

Secondary Outcomes

Secondary Outcomes (end points)
Current salary prediction, best annual outside offer, suggestions of other non wage benefits such as work-from home, suggestion for a more senior position, recommendation for continued negotiation, perceived likelihood of acceptance of the offer, general comments about the candidate, quality of the overall pool of candidates and general opinion about salary asks, in particular when made outside the pay range.
Secondary Outcomes (explanation)
For reasons behind continued negotiation recommendation, if the respondent says no we will use the following options: "Attempt to negotiate with this candidate to reach closer to the initially offered salary.", "Explore negotiating with this candidate by offering non-salary benefits but maintaining our initial offer.", and "Reject this application." The perceived likelihood of acceptance of the offer will be measured with a categorical variable on a 4-point scale. We will use a text box for other comments about the candidate. For the follow-up survey, to measure their opinion about the information contained by salary asks, we will ask how informative they think the candidates' counteroffers are regarding their current salaries, outside options and personalities. To measure their opinion about salary ask when made outside the pay range, we will offer the choice between: "Fear of wider re-negotiations among employees or the necessity of offering higher salaries to future candidates", "Considerations of fairness to other candidates regarding exceptions to the salary range", "Concerns about potential legal consequences for making exceptions.", "None of the above", "Other".
To measure gender norms, we will measure the frequency of female candidates mentioned among the top three selections, adjusted for the total number of high-quality female candidates (i.e., the number of candidate profiles with female names ranked in the top six biographies, as rated by all participants) included in the recruiter’s evaluation packet. We will also collect information about recruiters’ beliefs regarding the frequency of counteroffers, in particular for female candidates.

Experimental Design

Experimental Design
We will conduct a field experiment in real-world labor market settings. We will assume the role of an employer and hire actual recruiters to screen job applications, which have varying intensity of negotiation and whether the salary range was posted.
Experimental Design Details
Not available
Randomization Method
Randomization done in office by a computer
Randomization Unit
Recruiter
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
400 recruiters.
Sample size: planned number of observations
6400 resumes
Sample size (or number of clusters) by treatment arms
200 recruiters under pay transparency regime and 200 recruiters under no pay transparency. Within each regime, half show greater negotiation intent.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
University of Toronto
IRB Approval Date
2023-12-14
IRB Approval Number
45563
Analysis Plan

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