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.
|Number of pages||11|
|State||Published - 1 Jan 1997|
ASJC Scopus subject areas
- Business, Management and Accounting (all)
- Economics and Econometrics