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Unfair Chances and Labor Supply

Author

Listed:
  • Nickolas Gagnon
  • Kristof Bosmans
  • Arno Riedl

Abstract

We conduct an online experiment to study how the unfairness of chances leading to wage inequality affects labor supply decisions. We find that, at a given wage, disadvantageous wage inequality reduces labor supply, but whether this inequality stems from fair or unfair chances does not matter. That is, a procedure with fair chances does not compensate for wage inequality. Our results stand in stark contrast to prior empirical evidence showing that individuals care about fair chances when making equity judgments.

Suggested Citation

  • Nickolas Gagnon & Kristof Bosmans & Arno Riedl, 2025. "Unfair Chances and Labor Supply," CESifo Working Paper Series 12102, CESifo.
    • Handle: RePEc:ces:ceswps:_12102
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    Keywords

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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