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Envy in Mission-Oriented Organizations

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  • Francesca Barigozzi

    (Università di Bologna)

  • Ester Manna

    (Universitat de Barcelona)

Abstract

According to the labor donation theory, workers adhering to their firms' mission are willing to donate a portion of their paid labor. In this paper, we study how workers' fairness concerns limit the firm's ability to extract labor donation from its employees. We find that, in sectors where the firm's mission is important, optimal contracts are such that high-ability employees perceive their wage as less fair than low-ability employees and they must be rewarded with an "envy rent". The opposite is true in sectors where the firm's mission does not play a relevant role. We empirically test the predictions of the model using the German Socio-Economic Panel finding support for our theoretical results.

Suggested Citation

  • Francesca Barigozzi & Ester Manna, 2017. "Envy in Mission-Oriented Organizations," UB School of Economics Working Papers 2017/366, University of Barcelona School of Economics.
    • Handle: RePEc:ewp:wpaper:366web
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    4. Distefano, Rosaria, 2022. "Better to be in the same boat: Positional envy in the workplace," MPRA Paper 115396, University Library of Munich, Germany.
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    More about this item

    Keywords

    Mission-oriented organizations; Envy; Labor donations; Screening;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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