What is a fair wage? Reference points, entitlements and gift exchange

Bottino, Eleonora, García-Muñoz, Teresa, Goddio, Cintia and Kujal, Praveen (2016) What is a fair wage? Reference points, entitlements and gift exchange. Journal of Experimental and Behavioural Economics, 63 . pp. 125-135. ISSN 2214-8043

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Abstract

We look at the effect of endogenous and exogenous wage setting institutions on wage offers and effort in the classic gift exchange experiments (Fehr, Kirchsteiger and Riedl, 1993). An exogenously imposed minimum wage at the competitive outcome lowers average wage offers. Workers do not negatively reciprocate and continue to offer high effort. In the endogenous wage setting institution, where workers first make wage proposals, wage offers increase marginally and average effort decreases relative to the baseline when wage proposals are not matched. Relative to the baseline, efficiency decreases in the minimum wage treatment while it marginally increases in the endogenous treatment. We find evidence that the institutional structure has important implications towards wage offers, effort and efficiency.

Item Type: Article
Additional Information: Available online 7 June 2016
Research Areas: A. > Business School
Item ID: 20045
Useful Links:
Depositing User: Praveen Kujal
Date Deposited: 17 Jun 2016 09:59
Last Modified: 31 May 2019 11:38
URI: https://eprints.mdx.ac.uk/id/eprint/20045

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