While U.S. legislation prohibits employers from sharing information about their employees' compensation with each other, companies are still allowed to acquire and utilize more aggregated data provided by third parties. This practice is known as salary benchmarking. We provide theoretical and empirical evidence on the effects of salary benchmarking.
Cullen, Z.; Li, Shengwu and Perez-Truglia, R. (2022). What’s My Employee Worth? The Effects of Salary Benchmarking. NBER Working Paper No. 30570. [Revise & Resubmit, Review of Economic Studies.]