Resource What is a fair wage and who should decide it?
Type Scoping study, Desk study, Survey
Last update: 13/12/2011
Type: Scoping study, Desk study, Survey
Language English
Year of publication: 2007
Authors: Julian Rode, Marc Le Menestrel
Summary In an experimental laboratory setting two types of actors are involved in the generation of economic gain – Actives and Inactives. Only Actives have to complete a real-effort task to generate the gain; payments to Actives reflect the wage for their work.
In three treatments, the decision power to allocate payments from the economic gain is assigned (1) to Inactives, (2) both to Inactives and Actives equally, and (3) to Actives. In
all treatments we compare actual allocations with participants’ fairness judgments. We show that participants base fairness judgments on egalitarian and meritocratic reasoning,but not on libertarianism. They tend to interpret fairness self-servingly, and significantly
more so when they have absolute power. Many participants with absolute power admit
having divided unfairly in their self-interest. Across treatment comparison shows that
shared decision power enhances aggregate perceived fairness of allocations. We discuss
implications for corporate governance.
Role Organisation
Network Organisation organisation details Fair Price and Fair Wages
List Keywords
1.1 Socio- economic Sector (OECD) 331 Trade  
1.2 Institutional dimension Social- livelihood systems/ Gender  
1.4 Target group(s) 2. SMEs/Private sector
6. General public/Opinion makers  
2.2 Production Chain 2. Production & Management
9. Consumption/Product Use
7. Marketing
8. Quality Control