A Case for Pay Secrecy

• Autores: Tomer Blumkin, David Lagziel, Yoram Margalioth
• Localización: American law and economics review, ISSN 1465-7252, Vol. 25, Nº. 1, 2023, págs. 268-299
• Idioma: inglés
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• Resumen

  • In this paper, we study a labor market setup in which workers exhibit relative remuneration concerns with respect to their peers. We first characterize the optimal labor contract offered by the firm and provide necessary and sufficient conditions for the desirability of incorporating pay-secrecy clauses in such a contract. We then demonstrate that, in contrast to conventional wisdom viewing wage-secrecy arrangements as detrimental for workers, the latter may, in fact, gain from the lack of pay transparency.