The Salary Taboo: Privacy Norms and the Diffusion of Information
67 Pages Posted: 10 Nov 2018 Last revised: 30 Jan 2020
Date Written: October 2, 2018
The limited diffusion of salary information has implications for labor markets, such as wage discrimination policies and collective bargaining. Access to salary information is believed to be limited and unequal, but there is little direct evidence on the sources of these information frictions. Social scientists have long conjectured that privacy norms around salary (i.e., the salary taboo) play an important role. We provide unique evidence of this phenomenon based on a field experiment with 755 employees at a multibillion-dollar corporation. We provide revealed-preference evidence that many employees are unwilling to reveal their salaries to coworkers and reluctant to ask coworkers about their salaries. These frictions are still present, but smaller in magnitude, when sharing information that is less sensitive (seniority information). We discuss implications for pay transparency policies and the gender wage gap.
Keywords: Information Diffusion, Salary, Privacy, Inequality, Transparency, Gender
JEL Classification: D83, D84, D91, C93, J16, J31, M12
Suggested Citation: Suggested Citation