Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104771
Authors: 
Jeworrek, Sabrina
Mertins, Vanessa
Year of Publication: 
2014
Series/Report no.: 
IAAEU Discussion Paper Series in Economics 08/2014
Abstract: 
By conducting a natural field experiment, we test whether a managerial policy of allowing employees to self-determine their wages is as successful as recently suggested by laboratory evidence. We find that this policy indeed enhances performance. However, our data is clearly at odds with the conjecture of Pareto improvements, since labor costs grow even faster. Admittedly, the performance change is remarkable given that a considerable pay increase has no effect at all. Surprisingly, the data suggests that explicitly denying parts of the workforce this choice boosts performance, too. Additional experimental and survey data provides important insights into employees' underlying motivations.
Subjects: 
Field experiment
Delegation
Reciprocity
Responsibility alleviation
Compensation
Worker empowerment
Workplace democracy
JEL: 
C91
C93
J33
M52
M54
Document Type: 
Working Paper

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