Pay Discrimination and Innovation Productivity: Evidence from the Passage of State-Level Pay Secrecy Laws

72 Pages Posted: 15 Jul 2020 Last revised: 12 Jan 2021

See all articles by Huasheng Gao

Huasheng Gao

Fanhai International School of Finance, Fudan University

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Jin Zhang

Monash University

Date Written: June 22, 2020

Abstract

We examine the effect of state-level pay secrecy laws—laws that mitigate pay discrimination—on corporate innovation and inventor productivity. We find significant increases in the quantity and quality of patents produced by firms and inventors in states that have passed such laws. Moreover, the effects of this legislation are more pronounced for firms in states with greater existing pay gaps. Further mechanism tests indicate that the passage of pay secrecy laws promotes innovation by motivating inventors (especially discriminated inventors) to exert more effort, enhancing teamwork, and attracting talented discriminated inventors.

Keywords: Discrimination; Innovation; Inventor Productivity; Patents; Pay Secrecy Laws

JEL Classification: G30, J28, K32, O31

Suggested Citation

Gao, Huasheng and Hsu, Po-Hsuan and Zhang, Jin, Pay Discrimination and Innovation Productivity: Evidence from the Passage of State-Level Pay Secrecy Laws (June 22, 2020). Available at SSRN: https://ssrn.com/abstract=3632849 or http://dx.doi.org/10.2139/ssrn.3632849

Huasheng Gao

Fanhai International School of Finance, Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China
2165642222 (Phone)
2165642222 (Fax)

Po-Hsuan Hsu (Contact Author)

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

Jin Zhang

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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