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The Effect of Gift Exchange Theory on Wage Determination

Author

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  • Muhammed Enes Sasmaz

    (Istanbul, Turkiye)

  • Erdem Cam

    (Ankara Universitesi, Siyasal Bilgiler Fakultesi, Calisma Ekonomisi ve Endustri Iliskileri Bolumu, Ankara, Turkiye)

Abstract

The disciplines of psychology and economics have interacted over time due to their human-oriented approach and have started forming the discipline of behavioral economics since the 1950s. Labor economics examines the decisions of workers and employers regarding repeated human interactions and has also been affected by the development of behavioral economics. This discipline was recently defined as behavioral labor economics and has increased its awareness in recent years as a field where more multidisciplinary, innovative, and experimental methods are preferred, unlike traditional labor economics with its neoclassical and conservative characteristics. Behavioral labor economics discusses labor market aspects such as labor supply, effort, wages, and other behavioral factors in the workplace. Gift exchange theory provides insight into the many variables related to behavioral labor economics. According to the theory, receiving a wage level higher than the equilibrium market wage indicates a gift for employees, with employees being expected to work harder in exchange for this gift. This experimental study has been prepared based on gift exchange practices in which employees receive a wage above the one they accepted in way where it is considered a gift. As a result of the experiment, the gift exchange determined to be effective in the experimental group, and this level of effectiveness continued to increase over time.

Suggested Citation

  • Muhammed Enes Sasmaz & Erdem Cam, 2022. "The Effect of Gift Exchange Theory on Wage Determination," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 72(72-2), pages 939-974, December.
    • Handle: RePEc:ist:journl:v:72:y:2022:i:2:p:934-974
    DOI: 10.26650/ISTJECON2021-1181635
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    More about this item

    Keywords

    Behavioral labor economics; Behavioral economics; Gift exchange theory JEL Classification: J31 ; J41 ; C39 ; D51;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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