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WAGE SECRECY AS A SOCIAL CONVENTION
Author(s) -
DANZIGER LEIF,
KATZ ELIAKIM
Publication year - 1997
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1997.tb01894.x
Subject(s) - convention , secrecy , wage , economics , yield (engineering) , social security , labour economics , political science , law , market economy , materials science , metallurgy
Despite the general belie 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.