Working Paper: NBER ID: w25435
Authors: Morten Bennedsen; Elena Simintzi; Margarita Tsoutsoura; Daniel Wolfenzon
Abstract: We examine the effect of pay transparency on gender pay gap and firm outcomes. This paper exploits a 2006 legislation change in Denmark that requires firms to provide gender disaggregated wage statistics. Using detailed employee-employer administrative data and a difference-in-differences and difference-in-discontinuities designs, we find the law reduces the gender pay gap, primarily by slowing the wage growth for male employees. The gender pay gap declines by approximately two percentage points, or a 13% reduction relative to the pre-legislation mean. Despite the reduction of the overall wage bill, the wage-transparency mandate does not affect firm profitability, likely because of the offsetting effect of reduced firm productivity.
Keywords: gender pay gap; pay transparency; firm outcomes
JEL Codes: G18; G28; J16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| slowing of male wage growth (J39) | reduction in the gender pay gap (J79) |
| increase in female wage growth (J39) | reduction in the gender pay gap (J79) |
| negative impact on firm productivity (D22) | reduction in average wages per employee (J39) |
| 2006 legislation mandating pay transparency in Denmark (J79) | reduction in the gender pay gap (J79) |
| 2006 legislation mandating pay transparency in Denmark (J79) | slowing of male wage growth (J39) |
| 2006 legislation mandating pay transparency in Denmark (J79) | increase in female wage growth (J39) |
| 2006 legislation mandating pay transparency in Denmark (J79) | hiring more female employees (J21) |
| 2006 legislation mandating pay transparency in Denmark (J79) | promoting women more frequently (J62) |
| 2006 legislation mandating pay transparency in Denmark (J79) | negative impact on firm productivity (D22) |