Being open about pay reduces inequality

20 Feb 2020 By Siobhan Palmer

Transparency around rates of pay between male and female employees results in smaller gender pay gaps, a study in Denmark has shown

Increased transparency has a positive impact on gender pay gaps by depressing the wages of male employees, a paper from the Centre for Economic Policy Research has found. 

The study analysed the impact of gender pay legislation in Denmark, where it has been in place since 2006, and found increased transparency led the gender pay gap to close by an average of 7 per cent. 

The researchers found that in firms affected by the law (those with more than 35 employees), the salaries of male staff grew at a slower pace than in companies that weren’t affected. Additionally, the salaries of female staff rose in companies required to publish pay data, although the rate of the increase was less significant. 

The study also suggested organisations that published their pay gaps hired more women, and women were more likely to be promoted in those firms than in businesses not obliged by law to be transparent. 

Overall, companies unaffected by the legislation saw their pay gaps close by 2 percentage points fewer than those that published their data, and pay gaps in the companies affected by the legislation dropped by 7 per cent compared to before the law was introduced.

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