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Wage Secrecy as a Social Convention

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  • Danziger, Leif
  • Katz, Eliakim

Abstract

Despite the general belief that a free flow of information enhances efficiency, social convention appears to call for secrecy regarding individuals' wages. This paper provides an explanation for this convention. The authors suggest that the role of wage secrecy is to reduce effective labor mobility and thereby enhance the feasibility of risk-shifting contracts. Wage secrecy may yield a mix of mobility and risk shifting that is superior both to a spot market for labor and to a social convention that binds workers to their employers. Copyright 1997 by Oxford University Press.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 35 (1997)
Issue (Month): 1 (January)
Pages: 59-69

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Handle: RePEc:oup:ecinqu:v:35:y:1997:i:1:p:59-69

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Cited by:
  1. Daniele Nosenzo, 2012. "Pay Secrecy and effort provision," Discussion Papers 2012-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Gary Charness & Peter Kuhn, 2005. "Pay Inequality, Pay Secrecy, and Effort: Theory and Evidence," NBER Working Papers 11786, National Bureau of Economic Research, Inc.
  3. David Card & Alex Mas & Enrico Moretti & Emmanuel Saez, 2010. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," Working Papers 1269, Princeton University, Department of Economics, Industrial Relations Section..
  4. Astrid Haider & Ulrike Schneider, 2010. "The Influence Of Volunteers, Donations And Public Subsidies On The Wage Level Of Nonprofit Workers: Evidence From Austrian Matched Data," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 81(1), pages 1-20, 03.
  5. Schneck, Stefan, 2014. "My Wage is Unfair! Just a Feeling or Comparison with Peers?," Review of Behavioral Economics, now publishers, vol. 1(3), pages 245-273, May.
  6. Charness, Gary & Kuhn, Peter J., 2004. "Do Co-Workers’ Wages Matter? Theory and Evidence on Wage Secrecy, Wage Compression and Effort," IZA Discussion Papers 1417, Institute for the Study of Labor (IZA).
  7. Bartling, Björn & von Siemens, Ferdinand A., 2010. "The intensity of incentives in firms and markets: Moral hazard with envious agents," Labour Economics, Elsevier, vol. 17(3), pages 598-607, June.

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