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  • 2020
  • Working Paper
  • HBS Working Paper Series

The Salary Taboo: Privacy Norms and the Diffusion of Information

By: Zoë B. Cullen and Ricardo Perez-Truglia
  • Format:Print
  • | Language:English
  • | Pages:68
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Abstract

The limited diffusion of salary information has implications for labor markets, such as wage discrimination policies and collective bargaining. Access to salary information is believed to be limited and unequal, but there is little direct evidence on the sources of these information frictions. Social scientists have long conjectured that privacy norms around salary (i.e., the “salary taboo”) play an important role. We provide unique evidence of this phenomenon based on a field experiment with 755 employees at a multibillion-dollar corporation. We provide revealed-preference evidence that many employees are unwilling to reveal their salaries to coworkers and reluctant to ask coworkers about their salaries. These frictions are still present, but smaller in magnitude, when sharing information that is less sensitive (seniority information). We discuss implications for pay transparency policies and the gender wage gap.

Keywords

Search Costs; Privacy; Norms; Compensation; Financial Industry; Field Experiment; Compensation and Benefits; Knowledge Dissemination; Societal Protocols

Citation

Cullen, Zoë B., and Ricardo Perez-Truglia. "The Salary Taboo: Privacy Norms and the Diffusion of Information." NBER Working Paper Series, No. 25145, October 2018. (Harvard Business School Working Paper, No. 20-057, November 2019.)
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About The Author

Zoe B. Cullen

Entrepreneurial Management
→More Publications

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    • 2023
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    Is Pay Transparency Good?

    By: Zoë Cullen
    • 2022
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    What's My Employee Worth? The Effects of Salary Benchmarking

    By: Zoë B. Cullen, Shengwu Li and Ricardo Perez-Truglia
    • August 2022
    • Faculty Research

    The Spreadsheet

    By: Zoë B. Cullen and Alexander J. MacKay
More from the Authors
  • Is Pay Transparency Good? By: Zoë Cullen
  • What's My Employee Worth? The Effects of Salary Benchmarking By: Zoë B. Cullen, Shengwu Li and Ricardo Perez-Truglia
  • The Spreadsheet By: Zoë B. Cullen and Alexander J. MacKay
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