Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/177762
Authors: 
Barigozzi, Francesca
Manna, Ester
Year of Publication: 
2017
Series/Report no.: 
Quaderni - Working Paper DSE 1108
Abstract: 
According to the labor donation theory, workers adhering to their firms' mission are willing to donate a portion of their paid labor. In this paper, we study how workers' fairness concerns limit the firm's ability to extract labor donation from its employees. We find that, in sectors where the firm's mission is important, optimal contracts are such that high-ability employees perceive their wage as less fair than low-ability employees and they must be rewarded with an "envy rent". The opposite is true in sectors where the firm's mission does not play a relevant role. We empirically test the predictions of the model using the German Socio-Economic Panel finding support for our theoretical results.
Subjects: 
Mission-oriented organizations
envy
labor donations
screening
JEL: 
D03
D82
M54
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper
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