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Involuntary unemployment and non-compensating wage differentials in an experimental labour market

Author

Listed:
  • Georg Kirchsteiger
  • Ernst Fehr
  • Arno Riedl

Abstract

In this paper, the authors report the results of a series of efficiency wage experiments. Some of the key predictions of the efficiency wage hypothesis are qualitatively confirmed by the data: higher wages caused a reduction in shirking; firms offered contracts which exhibited positive job rents; firms offered systematically different wages and job rents which gave rise to noncompensating income differentials; and endogenous involuntary unemployment occurred. Copyright 1996 by Royal Economic Society.
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Suggested Citation

  • Georg Kirchsteiger & Ernst Fehr & Arno Riedl, 1996. "Involuntary unemployment and non-compensating wage differentials in an experimental labour market," ULB Institutional Repository 2013/5917, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:ulb:ulbeco:2013/5917
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    Cited by:

    1. Christoph Zaborowski & Peter Zweifel, 1999. "Getting Out of Debt: Garnishment of Wage in Whose Interest?," European Journal of Law and Economics, Springer, vol. 8(3), pages 207-230, November.
    2. Fortuna Casoria & Arno Riedl, 2013. "Experimental Labor Markets And Policy Considerations: Incomplete Contracts And Macroeconomic Aspects," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 398-420, July.
    3. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2007. "Gift Exchange in a Multi-Worker Firm," Economic Journal, Royal Economic Society, vol. 117(522), pages 1025-1050, July.
    4. Huck, Steffen & Seltzer, Andrew & Wallace, Brian, 2004. "Deferred Compensation and Gift Exchange: An Experimental Investigation into Multi-Period Labor Markets," IZA Discussion Papers 1193, Institute for the Study of Labor (IZA).
    5. repec:pit:wpaper:334 is not listed on IDEAS
    6. Tor Eriksson & Marie Claire Villeval, 2004. "Other-Regarding Preferences and Performance Pay. An Experiment on Incentives and Sorting," Post-Print halshs-00176781, HAL.
    7. Ohana, Marc, 2009. "La réciprocité sur le marché du travail : les limites du laboratoire," L'Actualité Economique, Société Canadienne de Science Economique, vol. 85(2), pages 239-256, juin.
    8. repec:eee:labchp:v:3:y:1999:i:pb:p:2291-2372 is not listed on IDEAS
    9. Ananish Chaudhuri, 2016. "Recent Advances in Experimental Studies of Social Dilemma Games," Games, MDPI, Open Access Journal, vol. 7(1), pages 1-11, February.
    10. Fehr, Ernst & Kirchsteiger, Georg & Riedl, Arno, 1998. "Gift exchange and reciprocity in competitive experimental markets," European Economic Review, Elsevier, vol. 42(1), pages 1-34, January.
    11. Gagnon, Nickolas & Noussair, C., 2016. "Does Reciprocity Persist Over Time?," Research Memorandum 033, Maastricht University, Graduate School of Business and Economics (GSBE).
    12. repec:eee:soceco:v:69:y:2017:i:c:p:50-60 is not listed on IDEAS
    13. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
    14. 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.
    15. Michael Burda & Werner G³th & Georg Kirchsteiger & Harald Uhlig, 2005. "Employment Duration and Resistance to Wage Reductions: Experimental Evidence," Homo Oeconomicus, Institute of SocioEconomics, vol. 22, pages 169-189.
    16. Georg Kirchsteiger & Michael Burda & Werner Güth & Harald Uhlig, 2005. "Employment duration and resistance to wage reductions," ULB Institutional Repository 2013/5897, ULB -- Universite Libre de Bruxelles.
    17. Altmann, Steffen & Falk, Armin & Huffman, David B., 2010. "Implicit Contracts, Unemployment, and Labor Market Segmentation," IZA Discussion Papers 5001, Institute for the Study of Labor (IZA).
    18. Işgın, Ebru & Sopher, Barry, 2015. "Information transparency, fairness and labor market efficiency," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 33-39.
    19. repec:gam:jgames:v:7:y:2016:i:1:p:7:d:64553 is not listed on IDEAS
    20. Chaudhuri, Ananish & Cruickshank, Amy & Sbai, Erwann, 2015. "Gender differences in personnel management: Some experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 20-32.
    21. Brian Roe & Steven Y. Wu, 2005. "Social Preferences and Relational Contracting Performance: An Experimental Investigation," Microeconomics 0509006, University Library of Munich, Germany.
    22. Carpenter, Jeffrey & Hans Matthews, Peter & Robbett, Andrea, 2017. "Compensating differentials in experimental labor markets," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 50-60.
    23. Annarita COLASANTE & Alberto RUSSO, 2014. "Reciprocity in the labour market: experimental evidence," Working Papers 404, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    24. Peter Hans Matthews, 2004. "Who is Post-Walrasian Man?," Middlebury College Working Paper Series 0412, Middlebury College, Department of Economics.

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