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Labor Contracts, Gift-Exchange and Reference Wages: Your Gift Need Not Be Mine!

Author

Listed:
  • Hernán Bejarano

    (CIDE, Department of Economics)

  • Brice Corgnet

    (Emlyon Business School)

  • Joaquín Gómez-Miñambres

    (Lafayette College, Department of Economics and Economic Science Institute, Chapman University)

Abstract

We extend Akerlof’s (1982) gift-exchange model to the case in which reference wages respond to changes in the work environment such as those related to unemployment benefits or workers’ productivity levels. Our model shows that these changes spur disagreements between workers and employers regarding the value of the reference wage. These disagreements tend to weaken the giftexchange relationship thus reducing production levels and wages. We find support for these predictions in a controlled, yet realistic, workplace environment. Our work also sheds light on several stylized facts regarding employment relationships such as the increased intensity of labor conflicts when economic conditions are unstable.

Suggested Citation

  • Hernán Bejarano & Brice Corgnet & Joaquín Gómez-Miñambres, 2019. "Labor Contracts, Gift-Exchange and Reference Wages: Your Gift Need Not Be Mine!," Working Papers 19-26, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:19-26
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/286/
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    Cited by:

    1. 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.

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    Keywords

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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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