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Status Concerns and the Organization of Work


  • Fershtman, C.
  • Weiss, Y.
  • Hvide, H.K.


We study the effects of local status, where workers compare their wage to the wage of other workers within the same firm. We assume a competitive labor market with unobservable effort, where firms condition wages on output as incentive for effort. If workers who care about status are also more productive, such status concerns generate an equilibrium with heterogenous firms where workers who care and workers who do not care about status work together.

Suggested Citation

  • Fershtman, C. & Weiss, Y. & Hvide, H.K., 2001. "Status Concerns and the Organization of Work," Papers 2001-2, Tel Aviv.
  • Handle: RePEc:fth:teavfo:2001-2

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    References listed on IDEAS

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Bruno S. Frey & Susanne Neckermann, 2008. "Awards: A view from psychological economics," IEW - Working Papers 357, Institute for Empirical Research in Economics - University of Zurich.
    2. Kräkel, Matthias, 2005. "Emotions and the Optimality of Unfair Tournaments," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 45, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Antonio Cabrales & Antoni Calvó, 2002. "Social preferences and skill segregation," Economics Working Papers 629, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Robert Dur & Amihai Glazer, 2004. "Optimal Incentive Contracts For a Worker Who Envies His Boss," CESifo Working Paper Series 1282, CESifo Group Munich.
    5. Antonio Cabrales & Antoni Calvó-Armengol & Nicola Pavoni, 2008. "Social Preferences, Skill Segregation, and Wage Dynamics," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 65-98.
    6. Auriol, Emmanuelle & Renault, Régis, 2000. "The Costs and Benefits of Symbolic Differentiation in the Work Place," IDEI Working Papers 101, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2002.
    7. Emmanuelle Auriol & Régis Renault, 2008. "Status and incentives," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 305-326.
    8. Antonio Cabrales & Antoni Calvó-Armengol, 2005. "Aversion to Inequality and Segregating Equilibria," Working Papers 177, Barcelona Graduate School of Economics.
    9. Amihai Glazer & Vesa Kanniainen & Panu Poutvaara, 2004. "Initial Luck, Status-Seeking and Snowballs Lead to Corporate Success and Failure," CESifo Working Paper Series 1216, CESifo Group Munich.
    10. Ederer, Florian & Patacconi, Andrea, 2010. "Interpersonal comparison, status and ambition in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 348-363, August.
    11. Abigail Barr & Pieter Serneels, 2004. "Wages and Reciprocity in the Workplace," CSAE Working Paper Series 2004-18, Centre for the Study of African Economies, University of Oxford.

    More about this item



    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • I2 - Health, Education, and Welfare - - Education
    • Z1 - Other Special Topics - - Cultural Economics


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