What is a fair wage? Reference points, entitlements and gift exchange

Article

Bottino, E., García-Muñoz, T., Goddio, C. and Kujal, P. 2016. What is a fair wage? Reference points, entitlements and gift exchange. Journal of Behavioral and Experimental Economics. 63, pp. 125-135. https://doi.org/10.1016/j.socec.2016.06.002
TypeArticle
TitleWhat is a fair wage? Reference points, entitlements and gift exchange
AuthorsBottino, E., García-Muñoz, T., Goddio, C. and Kujal, P.
Abstract

We look at the effect of endogenous and exogenous wage setting institutions on wage offers and effort in the classic gift exchange experiments (Fehr, Kirchsteiger and Riedl, 1993). An exogenously imposed minimum wage at the competitive outcome lowers average wage offers. Workers do not negatively reciprocate and continue to offer high effort. In the endogenous wage setting institution, where workers first make wage proposals, wage offers increase marginally and average effort decreases relative to the baseline when wage proposals are not matched. Relative to the baseline, efficiency decreases in the minimum wage treatment while it marginally increases in the endogenous treatment. We find evidence that the institutional structure has important implications towards wage offers, effort and efficiency.

KeywordsExogenous wage setting; Endogenous wage setting; Entitlements; Gift exchange
PublisherElsevier
JournalJournal of Behavioral and Experimental Economics
ISSN2214-8043
Electronic2214-8051
Publication dates
Print01 Aug 2016
Online07 Jun 2016
Publication process dates
Deposited17 Jun 2016
Accepted05 Jun 2016
Output statusPublished
Accepted author manuscript
License
Digital Object Identifier (DOI)https://doi.org/10.1016/j.socec.2016.06.002
Web of Science identifierWOS:000381591400013
LanguageEnglish
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