IDEAS home Printed from https://ideas.repec.org/p/zbw/vfsc14/100462.html
   My bibliography  Save this paper

Do Self-Determined Wages Really Improve Employees Performance? Evidence from a Randomized Field Experiment

Author

Listed:
  • Jeworrek, Sabrina
  • Mertins, Vanessa

Abstract

Recent laboratory evidence suggests that employees who have the extraordinary right to self-determine their wages perform better. By conducting a natural field experiment, we aim to test whether this policy actually has the predicted positive effects in a real-labor market. Employees were hired to file business reports for a half-day job. After one hour of working time, a random sample of employees was allowed to choose their own wage, whereas another control group was denied this right, while being paid the same wages as the first group. We find that performance is about 12% higher when employees self-determine their wage, whereas self-determined wages are about 20% higher . A last treatment group differed from the former only in that employees were aware that others have been granted this extraordinary right. Surprisingly, we observe here no performance decrease. An online follow-up survey reveals that the surprisingly high level of performance seems to be driven by individuals scoring high on agreeableness and wanting to prove to be trustworthy.

Suggested Citation

  • Jeworrek, Sabrina & Mertins, Vanessa, 2014. "Do Self-Determined Wages Really Improve Employees Performance? Evidence from a Randomized Field Experiment," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100462, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc14:100462
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/100462/1/VfS_2014_pid_897.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    2. Björn Bartling & Ernst Fehr & Holger Herz, 2014. "The Intrinsic Value of Decision Rights," Econometrica, Econometric Society, vol. 82, pages 2005-2039, November.
    3. repec:ner:ucllon:http://discovery.ucl.ac.uk/17678/ is not listed on IDEAS
    4. Emmanuelle Auriol & Régis Renault, 2008. "Status and incentives," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 305-326, March.
    5. repec:dau:papers:123456789/12479 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lara Ezquerra & Joaquin Gomez-Minambres & Natalia Jiminez & Praveen Kujal, 2021. "Making it public: The effect of (private and public) wage proposals on efficiency and income distribution," Working Papers 21-12, Chapman University, Economic Science Institute.
    2. Jörg Franke & Ruslan Gurtoviy & Vanessa Mertins, 2014. "Workers' Participation in Wage Setting and Opportunistic Behavior: Evidence from a Gift-Exchange Experiment," IAAEU Discussion Papers 201407, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. Mertins Vanessa & Albert Max, 2015. "Does Participation Increase Outcome Acceptance? Evidence from a Power-to-take Experiment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 235(6), pages 584-607, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sabrina Jeworrek & Vanessa Mertins, 2019. "Wage delegation in the field," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(4), pages 656-669, November.
    2. David Danz & Dorothea Kübler & Lydia Mechtenberg & Julia Schmid, 2015. "On the Failure of Hindsight-Biased Principals to Delegate Optimally," Management Science, INFORMS, vol. 61(8), pages 1938-1958, August.
    3. Özalp Özer & Upender Subramanian & Yu Wang, 2018. "Information Sharing, Advice Provision, or Delegation: What Leads to Higher Trust and Trustworthiness?," Management Science, INFORMS, vol. 64(1), pages 474-493, January.
    4. Dominguez-Martinez, Silvia & Sloof, Randolph & von Siemens, Ferdinand A., 2014. "Monitored by your friends, not your foes: Strategic ignorance and the delegation of real authority," Games and Economic Behavior, Elsevier, vol. 85(C), pages 289-305.
    5. Randolph Sloof & Ferdinand von Siemens, 2015. "Decision Initiation, Decision Implementation, and the Allocation of Decision Rights," CESifo Working Paper Series 5509, CESifo.
    6. João V. Ferreira & Nobuyuki Hanaki & Benoît Tarroux, 2017. "On the Roots of the Intrinsic Value of Decision Rights: Evidence from France and Japan," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2017-11, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    7. Lam, W., 2015. "Status in Organizations," LIDAM Discussion Papers CORE 2015033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Christian Zehnder & Holger Herz & Jean-Philippe Bonardi, 2016. "A Productive Clash of Cultures: Injecting Economics into Leadership Research," CESifo Working Paper Series 6175, CESifo.
    9. Ferreira, João V. & Hanaki, Nobuyuki & Tarroux, Benoît, 2020. "On the roots of the intrinsic value of decision rights: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 119(C), pages 110-122.
    10. Swagata Bhattacharjee, 2019. "Delegation Using Forward Induction," Working Papers 17, Ashoka University, Department of Economics.
    11. Swagata Bhattacharjee, 2019. "Delegation Using Forward Induction," Working Papers 1026, Ashoka University, Department of Economics.
    12. Fehrler, Sebastian & Janas, Moritz, 2021. "Delegation to a Group," IZA Discussion Papers 14426, Institute of Labor Economics (IZA).
    13. Alfonso Gambardella & Pooyan Khashabi & Claudio Panico, 2020. "Managing Autonomy in Industrial Research and Development: A Project-Level Investigation," Organization Science, INFORMS, vol. 31(1), pages 165-181, January.
    14. Hausfeld, Jan & Fischbacher, Urs & Knoch, Daria, 2020. "The value of decision-making power in social decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 898-912.
    15. Christian Schumacher, 2021. "Organizational structure and CEO dominance," Journal of Organization Design, Springer;Organizational Design Community, vol. 10(1), pages 19-34, March.
    16. Manuel Ammann & Philipp Horsch & David Oesch, 2016. "Competing with Superstars," Management Science, INFORMS, vol. 62(10), pages 2842-2858, October.
    17. Ertac, Seda & Gumren, Mert & Gurdal, Mehmet Y., 2020. "Demand for decision autonomy and the desire to avoid responsibility in risky environments: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 77(C).
    18. Cardoso, Ana Rute, 2012. "Money and rank in the labor market," Economics Letters, Elsevier, vol. 115(2), pages 325-328.
    19. Daron Acemoglu & Philippe Aghion & Claire Lelarge & John Van Reenen & Fabrizio Zilibotti, 2007. "Technology, Information, and the Decentralization of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1759-1799.
    20. Massimo Colombo & Annalisa Croce & Samuele Murtinu, 2014. "Ownership structure, horizontal agency costs and the performance of high-tech entrepreneurial firms," Small Business Economics, Springer, vol. 42(2), pages 265-282, February.

    More about this item

    JEL classification:

    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc14:100462. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.