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Salary History Bans and Wage Bargaining: Experimental Evidence

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  • Khanna, Shantanu

Abstract

Motivated by recently passed laws in the United States banning inquiries about salary history, this experiment examines the impact of information about a player’s outside option in bargaining. The policy intention is studied by comparing private information to perfect information. Since the laws do not prevent voluntary revelation of salaries, a third treatment examines the impact of adding a truthful revelation choice by the informed party. I find that the signaling value of revelation decisions undermines the benefits of private information. A fourth treatment allows for outside options to be misrepresented. Overall, results suggest that these laws may not work as well as intended.

Suggested Citation

  • Khanna, Shantanu, 2020. "Salary History Bans and Wage Bargaining: Experimental Evidence," Labour Economics, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:labeco:v:65:y:2020:i:c:s0927537120300579
    DOI: 10.1016/j.labeco.2020.101853
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    References listed on IDEAS

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    Cited by:

    1. Mask, Joshua, 2023. "Salary history bans and healing scars from past recessions," Labour Economics, Elsevier, vol. 84(C).
    2. Dmytro Osiichuk, 2022. "The Driver of Workplace Alienation or the Cost of Effective Stewardship? The Consequences of Wage Gap for Corporate Performance," Sustainability, MDPI, vol. 14(13), pages 1-26, June.

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    More about this item

    Keywords

    Labor Discrimination; Public Policy; Experimental Bargaining; Ultimatum Game; Cheap Talk; Signaling;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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