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Pay Growth, Fairness and Job Satisfaction: Implications for Nominal and Real Wage Rigidity

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  • Smith, Jennifer C.

Abstract

Theories of wage rigidity often rely on a positive relationship between pay changes and utility, arising from concern for fairness or gift exchange. Supportive evidence has emerged from laboratory experiments, but the link has not yet been established with Öeld data. This paper contributes a Örst step, using representative British data. Workers care about the level and the growth of earnings. Below-median wage increases lead to an insult e§ect except when similar workers have real wage reductions or Örm production is falling. Nominal pay cuts appear insulting even when the Örm is doing badly.

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  • Smith, Jennifer C., 2013. "Pay Growth, Fairness and Job Satisfaction: Implications for Nominal and Real Wage Rigidity," Economic Research Papers 270540, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:270540
    DOI: 10.22004/ag.econ.270540
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    Cited by:

    1. Christian Grund & Johannes Martin, 2017. "Monetary Reference Points of Managers – Empirical Evidence of Status Quo Preferences and Social Comparisons," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(1), pages 70-87, February.
    2. Drakopoulos, Stavros A. & Grimani, Katerina, 2015. "The Effect of Pay Cuts on Psychological Well-Being and Job Satisfaction," MPRA Paper 61195, University Library of Munich, Germany.

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