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A Cross-Cultural Real-Effort Experiment on Wage-Inequality Information and Performance

Author

Listed:
  • Liu-Kiel Hong

    (Institute of Management and Economics, Clausthal University of Technology, Julius-Albert-Str. 2, Clausthal-Zellerfeld 38678, Germany)

  • Cadsby C. Bram

    (Department of Economics and Finance, University of Guelph, Guelph, ON, Canada)

  • Schenk-Mathes Heike Y.

    (Institute of Management and Economics, Clausthal University of Technology, Julius-Albert-Str. 2, Clausthal-Zellerfeld 38678, Germany)

  • Song Fei

    (Ted Rogers School of Management, Ryerson University, Toronto, ON, Canada)

  • Yang Xiaolan

    (College of Economics, Zhejiang University, Hangzhou, Zhejiang, China)

Abstract

We conduct a real-effort laboratory experiment to examine how disclosure of information about the pay received by co-workers affects work performance in Germany and China. We employ an individual piece-rate setting in which a piece rate is received for each unit of output successfully produced. We find that receiving information that one’s co-workers are all receiving the same piece rate as oneself has no significant effect on performance compared to non-disclosure. In contrast, learning that one co-worker is receiving a higher piece rate than oneself does significantly affect performance. In particular, receiving such information initially results in a larger performance increase than receiving information that others are all receiving the same piece rate as oneself. However, this performance gap decreases toward the end of the experiment.

Suggested Citation

  • Liu-Kiel Hong & Cadsby C. Bram & Schenk-Mathes Heike Y. & Song Fei & Yang Xiaolan, 2013. "A Cross-Cultural Real-Effort Experiment on Wage-Inequality Information and Performance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(2), pages 1095-1120, October.
    • Handle: RePEc:bpj:bejeap:v:13:y:2013:i:2:p:1095-1120:n:4
    DOI: 10.1515/bejeap-2012-0040
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    References listed on IDEAS

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    Cited by:

    1. Masekesa, Faith & Munro, Alistair, 2020. "Intra-household inequality, fairness and productivity. Evidence from a real effort experiment," World Development, Elsevier, vol. 127(C).

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    More about this item

    Keywords

    inequity aversion; experiment; inequality; wage information; real effort; cross-cultural comparison;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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