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Unfair Pay and Health

Author

Listed:
  • Armin Falk
  • Fabian Kosse
  • Ingo Menrath
  • Pablo E. Verde
  • Johannes Siegrist

Abstract

This paper investigates physiological responses to perceptions of unfair pay. We use an integrated approach exploiting complementarities between controlled lab and representative panel data. In a simple principal-agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. Throughout the experiment we record agents' heart rate variability, which is an indicator of stress-related impaired cardiac autonomic control, and which has been shown to predict coronary heart disease in the long-run. Our findings establish a link between unfair payment and heart rate variability. Building on these findings, we further test for potential adverse health effects of unfair pay using observational data from a large representative panel data set. Complementary to our experimental findings we show a strong and significant negative association between unfair pay and health outcomes, in particular cardiovascular health.

Suggested Citation

  • Armin Falk & Fabian Kosse & Ingo Menrath & Pablo E. Verde & Johannes Siegrist, 2016. "Unfair Pay and Health," SOEPpapers on Multidisciplinary Panel Data Research 870, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp870
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    References listed on IDEAS

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    Cited by:

    1. D'Ambrosio, Conchita & Clark, Andrew E. & Barazzetta, Marta, "undated". "Unfairness at Work: Well-Being and Quits," CEPREMAP Working Papers (Docweb) 1802, CEPREMAP.

    More about this item

    Keywords

    Fairness; social preferences; inequality; heart rate variability; health; experiments; SOEP;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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