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Good practice Imported

Denmark's Mandatory Gender-Segregated Wage Statistics Law (2006)

Denmark · Copenhagen · See the Denmark profile · See the Copenhagen profile

Evidence: Quasi-experimental Top 26% 85/100 · Ask Evidence Copilot about this practice

Since 2006, Danish firms with 35+ employees must publish gender-segregated wage statistics. A quasi-experimental study of 2003-2008 payroll data found this narrowed the gender pay gap by about 7%, mainly by slowing men's wage growth, with a productivity trade-off.

18.9 to 17.6 %
Male wage premium in treated firms (2003-2008)
~7 %
Relative narrowing of the gender pay gap in treated firms (2003-2008)
~4 %
Increase in women hired into intermediate/lower hierarchical levels, treated firms (2003-2008)
-2.5 %
Change in average productivity, treated firms (2003-2008)
-2.8 %
Change in total wage bill, treated firms (2003-2008)

Details

Maturity
Established
Promoter
Folketinget (Danish Parliament) / Beskæftigelsesministeriet (Ministry of Employment)
Period
2006-present
Region (NUTS)
DK01
Keywords
labour market regulation, wage transparency, gender equality, employment law

Context

In 2006, Denmark amended its Equal Pay Act to require private-sector firms with more than 35 employees to compile and disclose gender-segregated wage statistics, covering roughly 1,000 firms nationwide.

Objectives

To narrow the gender pay gap by giving unions and works councils the information needed to identify unexplained pay differences between men and women doing comparable work.

Activities

A quasi-experimental study by Bennedsen, Simintzi, Tsoutsoura and Wolfenzon, published in the Journal of Finance (2022), used Danish employer-employee register data from 2003 to 2008, comparing firms just above the 35-employee threshold (subject to the law) with firms just below it (not subject, as a control group).

Results

The male wage premium fell from 18.9% to 17.6% in treated firms relative to controls - a roughly 7% relative narrowing of the gender pay gap - driven mainly by slower wage growth for men rather than faster growth for women. Treated firms also hired about 4% more women into intermediate and lower hierarchical levels. The same study found treated firms' average productivity fell by about 2.5% and their total wage bill fell by about 2.8%, though profitability was not significantly affected.

Conclusions

The law shows that wage-transparency mandates can narrow measured pay gaps through a specific, verifiable mechanism, but not without cost to the firms involved.

Implementation
Indicative cost
Low (< €50k) — Compliance cost falls on firms' payroll and HR administration; the quasi-experimental study found an associated ~2.5% productivity reduction and ~2.8% wage-bill reduction at treated firms.
Time to results
Long (> 3 years) — In force since 2006; evaluated using 2003-2008 register data; still in effect two decades later.
Staffing & skills
Folketinget (Danish Parliament) legislated the requirement; Beskaeftigelsesministeriet (Ministry of Employment) administers it; firms' own HR/payroll functions compile the statistics for unions and works councils

Conditions for success

  • A clear firm-size threshold (35+ employees) enabling rigorous evaluation and consistent application
  • Existing employer-employee payroll register infrastructure allowing unions and works councils to act on the disclosed data

Common failure modes

  • The narrowing of the pay gap came mainly from slowing men's wage growth rather than raising women's wages, and was accompanied by an estimated 2.5% fall in productivity and 2.8% fall in total wage bill at treated firms

Commonly funded by

CERV — Citizens, Equality, Rights and Values National / regional programmes

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Data sources

Where this practice's information was retrieved from, and when.

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