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The More You Know, the Better You’re Paid? Evidence from Pay Secrecy Bans for Managers
Stockholm University, Faculty of Social Sciences, The Swedish Institute for Social Research (SOFI).
2019 (English)In: Labour Economics, ISSN 0927-5371, E-ISSN 1879-1034, Vol. 59, p. 92-109Article in journal (Refereed) Published
Abstract [en]

Approximately half of Americans are employed at firms where employees are forbidden or discouraged from discussing their pay with coworkers. Employees who violate these rules may be subject to punishment or dismissal. While many employees are legally protected from reprisal under the National Labor Rights Act, the law exempts managers from these protections. Eleven states have passed laws banning pay secrecy policies for managers. In this paper, we explore what effect these state laws had on the wages and employment of managers. We find pay secrecy bans increased the wages of managers by 3.5% but had no effect on the gender wage gap, job tenure, or labor supply. The effects are heterogeneous along a number of dimensions. Below the median wage, female managers experienced a 2.9% increase in their wages relative to male managers. Above the median wage, male managers experienced a 2.7% increase in their wages relative to female managers. The wage gains were concentrated among managers employed at firms with fewer than 500 employees.

Place, publisher, year, edition, pages
2019. Vol. 59, p. 92-109
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-168829DOI: 10.1016/j.labeco.2019.03.003OAI: oai:DiVA.org:su-168829DiVA, id: diva2:1314977
Available from: 2019-05-10 Created: 2019-05-10 Last updated: 2019-09-19Bibliographically approved

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