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Wage Delegation in the Field

Author

Listed:
  • Sabrina Jeworrek

    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

  • Vanessa Mertins

    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

Abstract

By conducting a natural field experiment, we test whether a managerial policy of allowing employees to self-determine their wages is as successful as recently suggested by laboratory evidence. We find that this policy indeed enhances performance. However, our data is clearly at odds with the conjecture of Pareto improvements, since labor costs grow even faster. Admittedly, the performance change is remarkable given that a considerable pay increase has no effect at all. Surprisingly, the data suggests that explicitly denying parts of the workforce this choice boosts performance, too. Additional experimental and survey data provides important insights into employees' underlying motivations.

Suggested Citation

  • Sabrina Jeworrek & Vanessa Mertins, 2014. "Wage Delegation in the Field," IAAEU Discussion Papers 201408, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  • Handle: RePEc:iaa:dpaper:201408
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    References listed on IDEAS

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    Cited by:

    1. Köhler, Katrin & Pagel, Beatrice & Rau, Holger A., 2015. "How worker participation affects reciprocity under minimum remuneration policies: Experimental evidence," University of Göttingen Working Papers in Economics 267, University of Goettingen, Department of Economics.
    2. Christian Brück & Thorsten Knauer & Harald Meier & Anja Schwering, 2021. "Self-set salaries and creativity," Journal of Business Economics, Springer, vol. 91(1), pages 91-121, February.
    3. Marco Faillo & Costanza Piovanelli, 2017. "Wage delegation and intrinsic motivation: an experimental study," CEEL Working Papers 1701, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    4. Vanessa Mertins & Christian Walter, 2021. "In absence of money: a field experiment on volunteer work motivation," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 952-984, September.
    5. Adrian Chadi & Sabrina Jeworrek & Vanessa Mertins, 2017. "When the Meaning of Work Has Disappeared: Experimental Evidence on Employees’ Performance and Emotions," Management Science, INFORMS, vol. 63(6), pages 1696-1707, June.
    6. Franke, Jörg & Gurtoviy, Ruslan & Mertins, Vanessa, 2016. "Workers’ participation in wage setting: A gift-exchange experiment," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 151-162.

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    More about this item

    Keywords

    Field experiment; Delegation; Reciprocity; Responsibility alleviation; Compensation; Worker empowerment; Workplace democracy;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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