What determines workers’ preferences for efficiency over equity wages?
AbstractWhat makes workers consider it fair for wages to be indexed on job performance or efficiency? In this paper we attempt to answer this question using the 2005 wave of the World Values Survey data for 43 countries to investigate what socio-economic characteristics condition employees’ preference for efficiency over equity wages. Our results suggest that employees’ preference for efficiency wages increases with education and globalization while it decreases with unemployment, income inequality and income tax rates. Given that conventional economic theory demonstrates the importance of labour efficiency, which improves when workers are remunerated according to their efficiency, for economic growth; our results suggest that institutions and specifically public policies that promote education, and globalization, along with policies that reduce unemployment, income inequality and income tax rates could be used to promote efficiency-based wages.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200933.
Length: 15 pages
Date of creation: 2009
Date of revision:
Publication status: Forthcoming in
Find related papers by JEL classification:
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gottfries, N. & Westermak, A., 1995.
"Nominal Wage Contracts and the Persistent Effects of Monetary Policy,"
1995-22, Uppsala - Working Paper Series.
- Gottfries, Nils & Westermark, Andreas, 1998. "Nominal wage contracts and the persistent effects of monetary policy," European Economic Review, Elsevier, vol. 42(2), pages 207-223, February.
- Carter, Thomas J., 2005. "Money and efficiency wages: the neglected effect of employment on efficiency," The Journal of Socio-Economics, Elsevier, vol. 34(2), pages 199-209, March.
- Marcel Fafchamps & Agnes R. Quisumbing, .
"Human Capital, Productivity, and Labor Allocation in Rural Pakistan,"
97019, Stanford University, Department of Economics.
- Marcel Fafchamps & Agnes R. Quisumbing, 1999. "Human Capital, Productivity, and Labor Allocation in Rural Pakistan," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 369-406.
- Fafchamps, Marcel & Quisumbing, Agnes R., 1998. "Human capital, productivity, and labor allocation in rural Pakistan," FCND discussion papers 48, International Food Policy Research Institute (IFPRI).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernd Hayo).
If references are entirely missing, you can add them using this form.