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Reciprocity in Labor Relations: Evidence from a Field Experiment with Long-Term Relationships

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  • Matthieu Chemin
  • Joost DeLaat
  • André Kurmann

Abstract

We followed field workers administering a household survey over a 12-week period and examined how their reciprocal behavior towards the employer responded to a sequence of exogenous wage increases and wage cuts. To disentangle the effects of reciprocal behavior from other explicit incentives that occur naturally in long-term employment relationships, we devised a novel measure of effort that not only captures the notion of work morale but that field workers perceived as unmonitored. While wage increases had no significant effect, wage cuts led to a strong and significant decline in unmonitored effort. This finding provides clear evidence of a highly asymmetric reciprocity response to wage changes. Our estimates further imply that field workers quickly adapted to higher wages and revised their reference point accordingly when deciding on reciprocity. Finally, we consider a second measure of effort that was explicitly monitored and found no significant effect to any of the wage changes. This lack of impact illustrates that explicit incentives can easily outweigh the effects of reciprocity and highlights the importance of having a measure of effort that workers perceive as unmonitored when testing for reciprocity in long-term relationships.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 1127.

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Date of creation: 2011
Date of revision:
Handle: RePEc:lvl:lacicr:1127

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Related research

Keywords: Reciprocity; gift exchange; efficiency wages; field experiment;

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References

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  1. Fabrice Collard & David de la Croix, 2000. "Gift Exchange and the Business Cycle: The Fair Wage Strikes Back," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(1), pages 166-193, January.
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Cited by:
  1. Axel Ockenfels & Dirk Sliwka & Peter Werner, 2014. "Timing of Kindness - Evidence from a Field Experiment," CESifo Working Paper Series 4885, CESifo Group Munich.

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