Wage secrecy as a social convention

Leif Danziger, Eliakim Katz

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

Despite the general belief that a free flow of information enhances efficiency, social convention appears to call for secrecy regarding individuals' wages. This paper provides an explanation for this convention. We suggest that the role of wage secrecy is to reduce effective labor mobility, and thereby enhance the feasibility of risk-shifting contracts. Wage secrecy may yield a mix of mobility and risk shifting that is superior both to a spot market for labor and to a social convention that binds workers to their employers.

Original languageEnglish
Pages (from-to)59-69
Number of pages11
JournalEconomic Inquiry
Volume35
Issue number1
DOIs
StatePublished - 1 Jan 1997
Externally publishedYes

ASJC Scopus subject areas

  • Business, Management and Accounting (all)
  • Economics and Econometrics

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