Working Paper: NBER ID: w20558
Authors: Alexandre Mas
Abstract: This paper asks whether pay disclosure in the public sector changes wage setting at the top of the public sector distribution. I examine a 2010 California mandate that required municipal salaries to be posted online. Among top managers, disclosure led to approximately 7 percent average compensation declines, and a 75 percent increase in their quit rate, relative to managers in cities that had already disclosed salaries. The wage cuts were largely nominal. Wage cuts were larger in cities with higher initial compensation, but not in cities where compensation was initially out of line with (measured) fundamentals. The response is more consistent with public aversion to high compensation than the effects of increased accountability.
Keywords: No keywords provided
JEL Codes: J01; J31; J45; J63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 2010 California mandate for salary disclosure (M52) | average decline in compensation for city managers (M12) |
| average decline in compensation for city managers (M12) | quit rate of city managers (J63) |
| salary disclosure (J31) | wage cuts (J38) |
| salary disclosure (J31) | managerial job satisfaction and retention (M51) |
| salary disclosure (J31) | public aversion to high salaries (M12) |
| salary disclosure (J31) | distinct impact on compensation structures (M52) |