The Salary Taboo: Privacy Norms and the Diffusion of Information

Zoë B. Cullen, Ricardo Perez-Truglia

NBER Working Paper No. 25145
Issued in October 2018, Revised in October 2018
NBER Program(s):The Law and Economics Program, The Labor Studies Program, The Public Economics Program, The Political Economy Program

The diffusion of salary information has important implications for labor markets, such as for wage discrimination policies and collective bargaining. Despite the widespread view that transmission of salary information is imperfect and unequal, there is little direct evidence on the magnitude and sources of these frictions. We conduct a field experiment with 752 employees at a multibillion-dollar corporation to address these questions. We provide evidence of significant frictions in how employees search for and share salary information and suggestive evidence that these frictions are due to privacy norms. We do not find any significant differences in information frictions between female and male employees.

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25145