NATIONAL BUREAU OF ECONOMIC RESEARCH
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Do Firms Respond to Gender Pay Gap Transparency?

Morten Bennedsen, Elena Simintzi, Margarita Tsoutsoura, Daniel Wolfenzon

NBER Working Paper No. 25435
Issued in January 2019
NBER Program(s):Corporate Finance, Labor Studies

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 dis-aggregated wage statistics. Using detailed employee-employer administrative data and a difference-in-differences approach, we find that 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 7% reduction relative to the pre-legislation mean. In addition, the wage transparency mandate causes a reduction in firm productivity and in the overall wage bill, leaving firm profitability unchanged.

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Document Object Identifier (DOI): 10.3386/w25435

 
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