Gender pay gap reporting slows rate of male wage growth, study reveals Gender pay gap reporting slows rate of male wage growth, study reveals

Gender pay gap reporting slows rate of male wage growth, study reveals
11 Feb 2019

The transparency created by gender pay gap reporting can encourage employers to hire more women and lead to them being promoted more quickly, a study of organisations in Denmark has suggested.

The analysis also found that reporting slowed the wage growth of men and so had a levelling effect on pay.

Published in the Harvard Business Review, the Danish/US investigation is said to be the first empirical study on the impact of mandatory wage transparency. It examined the wage statistics of Danish companies before and after the introduction of the country’s 2006 Act on Gender Specific Pay Statistics, which required companies with more than 35 employees to report their gender pay gaps.

The researchers focused on companies with between 35 and 50 employees that were required to report and compared their pay data with identical information from a group of similar-sized firms with between 25 to 34 employees that were not required to release gender-segregated data.

The team found that disclosing disparities in gender pay does, in fact, narrow the gender wage gap. It may also lead to an increase in the number of women being hired and promoted, while lowering employers’ overall wage bills, largely as a result of slowing down the growth in male wages.

The findings showed that from 2003 to 2008, the gender pay gap at companies subject to mandatory reporting shrank by 7%, from 18.9% to 17.5%, while the gap at the control firms stayed steady at 18.9%. These outcomes suggest that governments can indeed take effective steps to address gender wage disparities by making it mandatory for employers to provide data showing discrepancies in gender pay.

But there were also some negative impacts that followed reporting activity, researchers discovered. According to Personnel Today, there was a significant fall in productivity among the reporting organisations compared with the control group. But the savings in wage costs meant that the increased transparency did not affect organisations’ net income.

The report said: “Firms concerned about a negative impact of these new laws on their profit don’t seem to have reason to fear.”

Meanwhile, a recent study from Spain suggests that, during financial negotiations, female employees are more likely to ask women in power for more money than they would a man. The team studied the behaviour of contestants taking part in a 2013 Spanish game show called Negocia Como Puedas, or Bargain As You Can, Quartz reported.

While female responders asked for less money when facing a male proposer, when negotiating with other women in a position of power, they “behaved in exactly the same way as men did”.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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The transparency created by gender pay gap reporting can encourage employers to hire more women and lead to them being promoted more quickly, a study of organisations in Denmark has suggested.

The analysis also found that reporting slowed the wage growth of men and so had a levelling effect on pay.

Published in the Harvard Business Review, the Danish/US investigation is said to be the first empirical study on the impact of mandatory wage transparency. It examined the wage statistics of Danish companies before and after the introduction of the country’s 2006 Act on Gender Specific Pay Statistics, which required companies with more than 35 employees to report their gender pay gaps.

The researchers focused on companies with between 35 and 50 employees that were required to report and compared their pay data with identical information from a group of similar-sized firms with between 25 to 34 employees that were not required to release gender-segregated data.

The team found that disclosing disparities in gender pay does, in fact, narrow the gender wage gap. It may also lead to an increase in the number of women being hired and promoted, while lowering employers’ overall wage bills, largely as a result of slowing down the growth in male wages.

The findings showed that from 2003 to 2008, the gender pay gap at companies subject to mandatory reporting shrank by 7%, from 18.9% to 17.5%, while the gap at the control firms stayed steady at 18.9%. These outcomes suggest that governments can indeed take effective steps to address gender wage disparities by making it mandatory for employers to provide data showing discrepancies in gender pay.

But there were also some negative impacts that followed reporting activity, researchers discovered. According to Personnel Today, there was a significant fall in productivity among the reporting organisations compared with the control group. But the savings in wage costs meant that the increased transparency did not affect organisations’ net income.

The report said: “Firms concerned about a negative impact of these new laws on their profit don’t seem to have reason to fear.”

Meanwhile, a recent study from Spain suggests that, during financial negotiations, female employees are more likely to ask women in power for more money than they would a man. The team studied the behaviour of contestants taking part in a 2013 Spanish game show called Negocia Como Puedas, or Bargain As You Can, Quartz reported.

While female responders asked for less money when facing a male proposer, when negotiating with other women in a position of power, they “behaved in exactly the same way as men did”.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

Publishing wage data could close Finnish gender pay gap, claims report

Czech republic boosts minimum wage

UK gender pay gap shrinks while US remains static

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