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Fairness and Freight-Handlers: Local Labor-Market Conditions and Wage-Fairness Perceptions in a Trucking Firm

  • Eric A. Verhoogen
  • Stephen V. Burks
  • Jeffrey P. Carpenter

The authors draw on an internal attitude survey conducted yearly from 1996 to 2000 in the freight-handling terminals of a unionized trucking firm to investigate the effect of local labor market conditions on employee wage-fairness perceptions. Their research design exploits the fact that local managers had no discretion to vary wage rates in response to local labor market conditions; local economic shocks thus generated exogenous variation in the attractiveness of the wage paid by the firm relative to employees' options in the outside labor market. The authors find robust associations between the wage-fairness perceptions of employees in the firm and each of two indicators of local conditions---the rate of unemployment and the wages of similar workers in the outside market. They argue that these correlations reflect a causal relationship: an increase in unemployment or a decrease in outside wages led workers to perceive their wage to be more fair.

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 60 (2007)
Issue (Month): 4 (July)
Pages: 477-498

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Handle: RePEc:ilr:articl:v:60:y:2007:i:4:p:477-498
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  1. Campbell, Carl M, III & Kamlani, Kunal S, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 759-89, August.
  2. Cappelli, Peter & Chauvin, Keith, 1991. "An Interplant Test of the Efficiency Wage Hypothesis," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 769-87, August.
  3. Hirsch, Barry & Schumacher, Edward J., 2003. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," IZA Discussion Papers 783, Institute for the Study of Labor (IZA).
  4. Murphy, Kevin M & Topel, Robert H, 1985. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 370-79, October.
  5. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
  6. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
  7. Simon Gächter & Ernst Fehr, . "Fairness in the Labour Market – A Survey of Experimental Results," IEW - Working Papers 114, Institute for Empirical Research in Economics - University of Zurich.
  8. George A. Akerlof & Andrew K. Rose & Janet L. Yellen, 1988. "Job Switching and Job Satisfaction in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 495-594.
  9. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  10. Bowles, Samuel, 1985. "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review, American Economic Association, vol. 75(1), pages 16-36, March.
  11. Michael H. Belzer, 1995. "Collective bargaining after deregulation: Do the Teamsters still count?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(4), pages 636-655, July.
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