Study shows women focus more on what other women earn than the gender gap

Making everyone’s salary public is supposed to be a great equalizer, but a new study finds women are more concerned with keeping up with each other than closing the gender pay gap.

A report published by the European Commission, the executive arm of the European Union, presents a startling, if sobering finding: Women in the workplace take for granted that they will be making less than their male peers, and so use pay transparency to turn their attention instead to whether they’re paid in line with other women at the same company.

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That conclusion could impact the results of trailblazing legislation currently under debate. The European Parliament voted earlier this month that companies with at least 50 employees should be required to disclose data on pay. The approved rules also ban those businesses from restricting workers from sharing compensation information. The proposals are subject to potential amendments and a final decision before they become law, which may take months. Lawmakers said the goal was to close the gender pay gap.

“The fact that women react more to differences in wages when comparing themselves to other women, than when comparing to men, implies we should be aware of this mechanism when promoting pay transparency if the objective is to empower women to react to the gender pay gap,” author Marianna Baggio, a behavioral economist for the European Commission, said in a video interview Tuesday.

The new study casts doubt over whether increased transparency alone can fix the gap between men's and women’s pay.

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The research asked 1,800 people across Germany, Spain and Poland — three of the countries most advanced in the goal of adopting pay transparency legislation — to complete a task in exchange for tokens. During the experiment, the workers were told whether they were paid well or badly compared to others.

When women discovered they were being paid less than other women, they were less motivated to put in extra effort — that would give them no reward — than when they found out men earned more.

A more effective way to encourage women to ask for pay raises might be to give them more feedback on their performance, said co-author Ginevra Marandola, an economist at the Italian Ministry of Economy and Finance.

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“Perhaps women need to increase their own self-esteem so they feel entitled to react to the gender pay gap,” she said.

The study also found that men tended to put in less extra effort in an organization with more female bosses, which Baggio said could be because the men saw women peers as a “threat to their status.” Meanwhile, women worked better under female managers.