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Resource Fair Wages and Effort: Evidence from a Field Experiment
Type Scoping study, Desk study, Survey
Last update: 23/05/2011
Type: Scoping study, Desk study, Survey
Language English
Year of publication: 2010
Authors: Alain Cohn, Ernst Fehr, and Lorenz Götte
Download: www.cepr.org/meets/..
Summary We conducted a field experiment to test whether wage increases induce workers to provide more work effort voluntarily. The experiment took place when a publisher hired workers to distribute a newly launched free newspaper at train stations and other public places. Workers were paid a flat wage and knew they did not have the prospect of long-term employment. Consequently, they had no economic incentives to exert more than minimal effort. We implemented wage increases and measured the associated changes in work performance. We also conducted a follow-up survey among the workers where we measured the wage workers thought would be appropriate for their
work as well as workers' propensity for reciprocal fairness. We show that a higher wage significantly increased work performance. Further analysis shows that only workers who both considered the base wage to be unfairly low and who revealed fairness preferences drove this effect. This evidence strongly corroborates the fair-wage effort hypothesis, which has sweeping implications for the functioning of labor markets.
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  
2.2 Production Chain 2. Production & Management