Faculty seminar with Morten Bennedsen

Morten Bennedsen - CV

Title: Pay Transparency and Mental Health.

Abstract:: This paper explores the impact of pay transparency on worker well-being. We exploit a pay transparency legislation in Denmark that requires firms with more than 35 employees to disclose pay information by gender. Using detailed administrative data on employee and mental health prescription drugs, we document the effect of the transparency policy. Our results suggest that the legislation led to a short-run decline in the anti-depressant use for women in affected firms. We consider two competing mechanisms behind this result: the potentially negative impact of horizontal (peer) comparisons and the potentially positive impact of organizational changes leading to the reduction of pay disparity. Taken together, our results are not consistent with a horizontal wage comparison mechanism and the evidence points to the second mechanism being the dominant force.