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    05 Dec 2018Working Paper Summaries

    The Salary Taboo: Privacy Norms and the Diffusion of Information

    by Zoë B. Cullen and Ricardo Perez-Truglia
    Barriers to the diffusion of salary information have implications for a wide range of labor market phenomena. This study of employees of a real organization shows that individuals significantly misinterpret their peers’ salaries, partly due to pervasive preferences for concealing own salary, and a potentially strategic decision of high earners to withhold their personal information.
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    Author Abstract

    The diffusion of salary information has important implications for labor markets, such as for wage discrimination policies and collective bargaining. Despite the widespread view that transmission of salary information is imperfect and unequal, there is little direct evidence on the magnitude and sources of these frictions. We conduct a field experiment with 752 employees at a multibillion-dollar corporation to address these questions. We provide evidence of significant frictions in how employees search for and share salary information and suggestive evidence that these frictions are due to privacy norms. We do not find any significant differences in information frictions between female and male employees.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: October 2018
    • HBS Working Paper Number: NBER Working Paper Series, No. 25145
    • Faculty Unit(s): Entrepreneurial Management
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    Zoe B. Cullen
    Zoe B. Cullen
    Assistant Professor of Business Administration
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