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

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  • Christian Thöni

    ()

  • Simon Gächter

    ()

Abstract

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 Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2009 with number 2009-29.

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Length: 28 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:usg:dp2009:2009-29
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Keywords: fair wage-effort hypothesis; wage comparison; gift exchange; horizontal fairness; discrimination;

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Find related papers by JEL classification:
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
  • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
  • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
  • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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