The Salary Taboo: Privacy Norms and the Diffusion of Information

39 Pages Posted: 16 Oct 2018

See all articles by Zoe Cullen

Zoe Cullen

Harvard University - Business School (HBS)

Ricardo Perez-Truglia

University of California, Berkeley; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2018

Abstract

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.

Suggested Citation

Cullen, Zoe and Perez-Truglia, Ricardo, The Salary Taboo: Privacy Norms and the Diffusion of Information (October 2018). NBER Working Paper No. w25145, Available at SSRN: https://ssrn.com/abstract=3266238

Zoe Cullen (Contact Author)

Harvard University - Business School (HBS) ( email )

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HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=879471

Ricardo Perez-Truglia

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

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