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Effort and Comparison Income : Survey and Experimental Evidence

Author

Listed:
  • Andrew E. Clark

    (DELTA - Département et Laboratoire d'Economie Théorique et Appliquée - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

  • David Masclet

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Marie Claire Villeval

    (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure-Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper combines ISSP survey data and experimental evidence from a gift-exchange game to determine the effect of status or relative income on work effort. We find a strong effect of others' incomes on individual effort decisions in both datasets. The individual's rank in the income distribution has a more powerful effect on effort than does others' average income, suggesting that comparisons are more ordinal than cardinal. We further show that, controlling for own income and income rank, the width of the relevant income distribution matters, with effort increasing in the distance from the bottom of the income distribution. Last, effort is also affected by comparisons over time: those who received higher income offers or had higher income rank in the past exert lower levels of effort for a given current income

Suggested Citation

  • Andrew E. Clark & David Masclet & Marie Claire Villeval, 2006. "Effort and Comparison Income : Survey and Experimental Evidence," Post-Print halshs-00142880, HAL.
    • Handle: RePEc:hal:journl:halshs-00142880
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00142880v1
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    Citations

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    Cited by:

    1. Jean-Yves Duclos, 2006. "Liberté ou égalité?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 82(4), pages 441-476.
    2. Fernanda Rivas, 2009. "Wage dispersion and workers` effort," Economics Bulletin, AccessEcon, vol. 29(2), pages 788-794.
    3. Jean-Yves Duclos, 2006. "Equity and Equality," Cahiers de recherche 0629, CIRPEE.
    4. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2009. "Homo Reciprocans: Survey Evidence on Behavioural Outcomes," Economic Journal, Royal Economic Society, vol. 119(536), pages 592-612, March.
    5. Jean‐Yves Duclos, 2006. "Innis Lecture: Equity and equality," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(4), pages 1073-1104, November.
    6. Maria Fernanda Rivas & Matthias Sutter, 2008. "Wage dispersion and workers' effort," Working Papers 2008-15, Faculty of Economics and Statistics, Universität Innsbruck.
    7. Abeler, Johannes & Altmann, Steffen & Kube, Sebastian & Wibral, Matthias, 2006. "Reciprocity and Payment Schemes: When Equality Is Unfair," IZA Discussion Papers 2500, Institute of Labor Economics (IZA).
    8. Möller Quintanar, Ana, 2022. "Transparency in Complex Compensation Systems," Junior Management Science (JUMS), Junior Management Science e. V., vol. 7(1), pages 185-200.
    9. Eriksson, Tor & Villeval, Marie Claire, 2008. "Performance-pay, sorting and social motivation," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 412-421, November.
    10. Carmen Herrero & Juan D. Moreno‐Ternero, 2009. "Estimating production costs in the economic evaluation of health‐care programs," Health Economics, John Wiley & Sons, Ltd., vol. 18(1), pages 21-35, January.
    11. Kuhnen, Camelia M. & Tymula, Agnieszka, 2008. "Rank expectations, feedback and social hierarchies," MPRA Paper 13428, University Library of Munich, Germany, revised Jan 2009.

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    Keywords

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    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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