Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/246590
Authors: 
Bogliacino, Francesco
Grimalda, Gianluca
Pipke, David
Year of Publication: 
2021
Series/Report no.: 
Kiel Working Paper No. 2199
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
The gift exchange hypothesis postulates that workers reciprocate above market-clearing wages with above-minimum effort. This hypothesis has received mixed support in dyadic employer-worker relationships. We present a field-experimental test to assess this hypothesis in the context of a triadic relationship in which only one out of two workers receives a pay increase. We conjecture that inequality aversion motivations may thwart positive reciprocity motivations and analyze the interaction between such motivations theoretically. Across three treatments, the pay increase is justified to workers based on either relative merit or relative need or was arbitrary as no justification was offered. Two conditions in which either none or both workers receive a bonus serve as the reference. In contrast to the gift exchange hypothesis, we find that pay increases lead to a decrease in productivity. Such a decrease is most sizable in the condition where both workers receive the bonus. A post-diction of this result is that workers interpret the monetary bonus as a signal of the employer's contentment with their effort, which makes them feel entitled to reduce their effort. In other treatments, receiving the pay increase while the coworker does not has a positive effect on productivity, especially when the pay increase is based on merit. This result is consistent with statusseeking preferences rather than aversion against advantageous inequality. Conversely, not receiving the pay increase while the coworker does, leads to lower productivity, especially when the pay increase is assigned based on relative needs.
Subjects: 
Gift exchange
employer-worker relationship
pay inequality
field experiment
reciprocity
labor market
effort provision
fairness
wage inequality
Document Type: 
Working Paper

Files in This Item:
File
Size
804.27 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.