The Professor will present the paper ''Pay Transparency and Mental Health''
(with M. Bennedsen, D. Scur, M. Tsoutsoura and D. Wolfenzon)
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 employee and mental health prescription administrative data, we use two empirical strategies, Difference-in-Differences and Regression Discontinuity Design. Our results suggest that the legislation led to a short-run decline in the relative growth rate of 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.