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Social Comparison and Performance: Experimental Evidence on the Fair Wage-Effort Hypothesis

  • Gächter, Simon

    ()

    (University of Nottingham)

  • Thöni, Christian

    ()

    (University of St. Gallen)

We investigate the impact of wage comparisons for worker productivity. We present three studies which all use three-person gift-exchange experiments. Consistent with Akerlof and Yellen's (1990) fair wage-effort hypothesis we find that disadvantageous wage discrimination leads to lower efforts while advantageous wage discrimination does not increase efforts on average. Two studies allow us to measure wage comparison effects at the individual level. We observe strongly heterogeneous wage comparison effects. We also find that reactions to wage discrimination can be attributed to the underlying intentions of discrimination rather than to payoff consequences.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4687.

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Length: 29 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:iza:izadps:dp4687
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