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Why Are Most Translators Underpaid? A descriptive explanation using asymmetric information and a suggested solution from signaling theory

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Andy Lung Jan ChanIt is a common observation that most professional translators are not paid well. Most attribute this to the low perceived status of translators and their work. Because of the low pay, many good translators have left the profession for other jobs. This line of thought sounds reasonable but it is also highly evaluative which makes empirical testing impossible. This paper offers an alternative explanation which is descriptive in nature and draws heavily from the theories of information economics. This discussion is in line with the paradigm of descriptive translation studies which emphasizes explanation and prediction. However, in addition to this, Chesterman (1993) points out that translation studies should also cater to evaluation, and I believe that my analysis might offer some insights for improving the situation of professional translators.

Section 1 starts by giving a brief discussion of two important concepts in information economics: asymmetric information and signaling. Section 2 then illustrates how asymmetric information can be used to explain the low pay which we observe in the translators' market. This section also analyzes why this problem of asymmetric information may lead to an outflow of "good" translators. In Section 3, I suggest how effective signals, such as a valid and reliable certification system, can be used to solve the problem of asymmetric information in the translators' market and hence improve the pay of capable professional translators.  

1. Asymmetric information and signaling theory

In economics jargon, a market with asymmetric information refers to one in which one side of the market has more information than the other side and this results in a market price lower than the "fair" price (Kingma 2001). The fundamentals of asymmetric information theory were first put forward by Akerlof (1970) in his seminal paper "The market for lemons: Quality uncertainty and the market mechanism". The theory he laid down has a wide application ranging from the insurance and credit market to the labor market. He was awarded the Nobel Prize in Economics in 2001 for his contribution to the field of information economics.

In his original paper, Akerlof (1970) uses the example of second-hand cars to illustrate the problem of asymmetric information. For simplicity's sake and for the purpose of illustration, he assumes that in the market of used cars, there are only two types of cars: good cars and bad cars (bad cars are called "lemons" in the US). Before buying a used car, the potential buyer forms a probability distribution: a probability q that a car is a good second-hand car and a probability of 1-q that it is a lemon. After owning a specific used car for some time, the owner can form a better idea of its quality. It is highly likely that a new probability distribution is to be formed. This estimate is more accurate than the original one. This is clearly a case of an asymmetry in available information: the sellers have more knowledge about the quality of a car than the buyers. Since it is impossible for a potential buyer to tell the difference between a good used car and a bad one, sellers may sell both of them at the same price.

This might lead to a problem which some people may call a version of Gresham's Law: Most traded cars will be "lemons" and good cars may not be traded at all. The original version is "Bad money drives out good money". Bad cars drive out good cars because both of them are sold at the same price, and the owners of good cars therefore do not find it worthwhile to sell their cars.

One possible way to tackle this problem is to use an effective signal. In this case, a signal is effective if we can use it to differentiate between good used cars and lemons. This concept of signaling was first used by Spence (1973) in his studies of the job market. He maintains that an education or degree can act as a signal to employers about the ability of a potential employee. In the example of the second-hand car market, a reputable large car dealer may be a more effective signal than someone who advertises in the newspaper because the former has spent a great deal of money on their showroom and is more likely to be dependable.

2. Asymmetric information in the translators' market

Most would agree that professional translators (or certainly the majority of translators) do not receive good pay. However, most seem to be unable to provide an empirical and testable hypothesis to explain this phenomenon. Many attribute this plight to the low perceived status of translators and their work. For example, Schreiber writes that "Most people still look upon us [professional translators] as, at best, semi-professionals, at worst non-professionals" (quoted in Liu 2001: 51). Therefore, most suggested solutions to this problem involve raising the status of translators. Robinson (2003) points out that "[translators should] work to educate clients and the general public about the importance of translation, so that money managers will be more willing to pay premium fees for translation" (28). The following discussion attempts to provide an alternative explanation using the theory of asymmetric information.

In a translation service market, it is difficult for service buyers or clients to assess the skills of a translator before they receive the translation. Therefore, the problem of asymmetric information exists in this market. In practice, clients can ask potential translators to first translate a small sample of the entire project, however, there is no guarantee that this sample will be a valid and reliable representative of the whole.

Since translation service buyers cannot distinguish between a good translator and a bad translator because of the asymmetric information problem, they tend to pay a going price that is below the "fair" level. For example, let us first assume good translators are worth $10 for a certain number of words and bad translators $5. As clients do not have complete information about the quality of translators, they are only willing to pay according to a certain probability distribution. Assuming a probability of 50% for both types of translators, i.e. half are good and half are bad, clients are only willing to pay $10(1/2)+$5(1/2)=$7.5. (This distribution is actually a bit conservative. We often hear complaints about poor translations, while good translations are seldom praised. Therefore, the probability that clients will expect a translator to be bad might be higher than 50%.)

One result is that most good translators will leave the market and only the poorer translators will stay. This phenomenon is sometimes termed "adverse selection" in the economics literature (see for example, Stiglitz and Walsh, 2002). In the illustration above, good translators should be paid $10 but they receive only $7.5 because of the asymmetric information problem. Of course, we cannot rule out the possibility that a few translators will stay in the market because they find the work fulfilling in terms of non-monetary rewards.

One might point out that the problem of asymmetric information does not exist if translators work for established clients who are aware of the consistent high quality of their translations. However, this is not often the case, and it is more common to hear that freelance translators need to constantly look for new clients in order to make ends meet.

Therefore, we may say that Gresham's Law and adverse selection also apply here. Many highly skilled translators set up their own agencies and farm jobs out to freelancers. In this case, they devote more time and effort to project management and marketing than translation work. On the other hand, some translators might acquire further academic qualifications and become translator trainers.

3. Signaling in the translators' market: Accreditation and certification

In an online symposium held in January 2000 by the Intercultural Studies Group (ISG) at the Universitat Rovira i Virgili, most discussants agreed on the importance of accreditation and certification (Dimitrova, 2000). Most of them believe that it would lead to the professionalization of translators, improving pay and working conditions. The author of this paper would add that accreditation or certification, if devised and implemented in a valid and reliable manner, could also act as an effective signal to differentiate good translators and bad ones. In fact, the United States (American Translators Association) and Britain (Institute of Linguists) have been working on developing systems for accreditation/certification. In China, an attempt was made by the Ministry of Personnel to devise a national accreditation system for translators in 2003.

Of course, designing an effective accreditation system is more easily said than done, and quite a number of authors have argued against such a system. For example, Chriss (nd) points out the difficulties in evaluation and the enormous costs involved in making the system "widely recognized and accepted as a sign of superior quality, as for instance ISO-9000 certification is within some industries". He prefers the status quo of the translators' market being a gray market (in the terminology we have used, this would mean a market with asymmetric information). My position is that no accreditation system can claim to be perfect, or perfectly valid and reliable, but as with other standardized tests (for example, TOEFL and IELTS in language testing), certification should always be dynamic and constantly changing to answer to evolving market and social demands. As concluded in the online symposium held by the ISG, "The criteria for accrediting/certifying translators/interpreters are not universally given, but to a large extent depend upon who does the accrediting and what its purpose is held to be". Therefore, we might say that accreditation and certification of translators is not a perfect solution to the problem of asymmetric information but nonetheless offers a signal that may offer buyers of translation services to determine the quality of translators.

4. Conclusion

This paper uses the concept of asymmetric information to provide a descriptive explanation of why most professional translators are underpaid. This is superior to the traditional, purely evaluative explanation that the perceived status of translators and their work is low. Effective signaling in the form of accreditation and certification is suggested as a means to partially solve this problem, although there are many issues to consider in the design and implementation of a valid, reliable and cost-effective accreditation system which may be worthy topics for further research.


Akerlof, George A. 1970. "The market for "lemons": Quality uncertainty and the market mechanism". Quarterly Journal of Economics 84 (3): 488-500.

Chesterman, Andrew. 1993. "From 'Is' to 'Ought': Translation laws, norms and strategies". Target 5(1): 1-20.

Chriss, Roger. nd. "Accreditation and standards in the translation industry". http://www.translationdirectory.com/article40.htm (16 July 2004)

Dimittrova, Birgitta Englund. 2000. "Summary of discussion on 'Accreditation' in an on-line symposium 17-25 January 2000". URV, Tarragona, Spain: Innovation in Translator and Interpreter Training (ITIT). http://www.fut.es/~apym/symp/s-accreditation.html (16 July 2004)

Kingma, Bruce R. 2001. The Economics of Information. Englewood, Colorado: Libraries Unlimited, Inc.

Liu, Ching-chih. 2001. "The Hong Kong Translation Society: A concise history, 1971-1999". In Translation in Hong Kong: Past, Present and Future, S.-W. Chan (ed.) 37-72. Hong Kong: The Chinese University Press.

Robinson, Douglas. 2003. Becoming a Translator: An Introduction to the Theory and Practice of Translation. London and New York: Routledge.

Spence, Michael. 1973. "Job market signaling". Quarterly Journal of Economics. 87: 355-74.

Stiglitz, Joseph E. and Walsh, Carl E. 2002. Economics. New York: W. W. Norton & Company.





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