Pay Secrecy and Effort Provision

16 Pages Posted: 7 May 2013

Date Written: July 2013


Pay secrecy is often justified on the ground of concerns about the detrimental consequences of intra‐firm pay comparisons for work morale and performance. Surprisingly, however, there is only limited empirical evidence that the availability of pay comparison information is detrimental for effort provision. In this paper, I study pay comparison effects in a gift‐exchange game laboratory experiment where an employer is matched with two symmetric employees. I compare effort choices made by employees in a “pay secrecy” treatment and in two “public wages” treatments where employees are informed of the wage paid to the co‐worker. In one “public wages” treatment the employer can choose both wages she pays to the employees, while in the other treatment the wage paid to one employee is regulated exogenously. I show that pay disclosure can be detrimental for effort provision if employees are treated unequally.

JEL Classification: A13, C92, J31

Suggested Citation

Nosenzo, Daniele, Pay Secrecy and Effort Provision (July 2013). Economic Inquiry, Vol. 51, Issue 3, pp. 1779-1794, 2013. Available at SSRN: or

Daniele Nosenzo (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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