Pay Transparency and Inventor Productivity: Evidence from State-level Pay Secrecy Laws

90 Pages Posted: 15 Jul 2020 Last revised: 26 Jul 2023

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; National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Jin Zhang

Monash University

Date Written: July 24, 2023

Abstract

We examine the role of pay transparency in the productivity of firms’ and inventors’ innovation activities. Our test exploits the staggered adoption of state-level pay secrecy laws, which enhance pay transparency in the workplace. We find a significant increase in inventor productivity of firms located in states that have passed such laws relative to firms elsewhere. This relation is more pronounced for firms in states with lower levels of pre-existing pay transparency. We further show that pay secrecy laws promote inventor productivity by motivating inventors—especially minority inventors—to exert more effort, enhancing the diversity of inventor teams, and encouraging all inventors to pursue promotions.

Keywords: pay transparency; pay secrecy laws; innovation; inventor productivity; patents

JEL Classification: G30, J28, K32, O31

Suggested Citation

Gao, Huasheng and Hsu, Po-Hsuan and Zhang, Jin, Pay Transparency and Inventor Productivity: Evidence from State-level Pay Secrecy Laws (July 24, 2023). 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

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Jin Zhang

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
567
Abstract Views
2,512
Rank
89,718
PlumX Metrics