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Wage negotiations and strategic responses to transparency

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  • Werner, Peter

Abstract

This paper investigates how negotiations between employers and employees respond to exogenous and endogenous wage transparency. In a treatment with exogenous wage transparency, employers' offers increase significantly compared to the case when offers are private information. Moreover, the share of equal wage offers becomes larger. Employers and employees rarely induce transparency themselves. In a treatment where employees could enforce transparency, average wage offers are significantly lower than in the other treatments. Thus, employees forego potential wage increases by staying ignorant about co-workers' offers. Taken together, these findings have important implications for recent policies aimed at increasing wage transparency.

Suggested Citation

  • Werner, Peter, 2019. "Wage negotiations and strategic responses to transparency," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203567, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc19:203567
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    Cited by:

    1. Oliver Gürtler & Lennart Struth, 2021. "Do Workers Benefit from Wage Transparency Rules?," ECONtribute Discussion Papers Series 105, University of Bonn and University of Cologne, Germany.

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    More about this item

    Keywords

    Wage transparency; wage negotiations; real-effort; gift exchange; experiment;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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