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

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. The measure gave unions and works councils the information needed to identify unexplained pay differences between men and women doing comparable work.

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

Read the full analysis: https://www.insead.edu/news/wage-transparency-works-reduces-gender-pay-gap-7-percent