Status, Relative Pay, and Wage Growth: Evidence from M&A
AbstractWe use evidence from worker turnover following M&A events to show that workers’ choices to leave the firm depend on changes in workers’ relative standing, or status, in terms of wage and rank. Our results show that social, rather than pecuniary, preference drives these choices. We also show that social preference varies with reference group. When worker's expected status within a group of co-workers in the same occupation increases, workers are less likely to quit. In contrast, when workers’ expected status compared to all workers within the same firm increases, they are more likely to quit. Moreover, for workers who lose status during M&A, the loss of social rewards is compensated by faster wage growth, suggesting a market for status.
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Bibliographic InfoPaper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 07-026.
Date of creation: Apr 2007
Date of revision:
wage growth; status; pay; promotion; compensation;
Find related papers by JEL classification:
- J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other
- J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
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