“Disclosing the Gender Pay Gap”

Morten Bennedsen, University of Copenhagen;
Elena Simintzi, University of British Columbia;
Margarita Tsoutsoura, Cornell University;
Daniel Wolfenzon, Columbia Business School

Abstract: We exploit a 2006 legislation change in Denmark that requires firms to provide gender dis-aggregated wage statistics to study the effect of transparency on gender pay disparities on employee and firm outcomes. Using detailed employee-employer administrative data we find that the policy has an effect in changing compensation within firms, through slowing the growth of compensation for male employees. Furthermore,  the information disclosure on gender pay differences and the resulting changes in relative pay within firms have also an effect on employee reallocation. We show that treated firms experience an increase in the joining rate of women employees as compared to control firms.  Furthermore, we explore the effect of such changes in firm wage policies following the passage of the law on firm outcomes.