Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation

Owens, Mark F.; Kagel, John H.

doi:10.1016/j.jebo.2009.12.002

Cited by 43 publications

(18 citation statements)

References 20 publications

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“…In fact, a recent study by Riley and Rosazza Bondibene () presents firm‐level evidence that both the initial British minimum wage introduction and the subsequent minimum wage increases in the aftermath of the crisis caused productivity to increase. Theoretical reasons for this growth in labor productivity are (Riley and Rosazza Bondibene, ): (1) substitution effects when firms replace labor inputs by capital, (2) firms increasing investments in training (Acemoglu and Pischke, ; Arulampalam et al ., ), (3) efficiency‐enhancing human resource practices (Hirsch et al ., ), (4) higher performance standards of the firm, and (5) increased worker effort in response to receiving higher or fair wages (Akerlof, ; Owens and Kagel, ). As we look at individual engagement as an outcome variable, this mostly identifies effects via the last channel.…”

Section: Discussionmentioning

confidence: 99%

“…(1) substitution effects when firms replace labor inputs by capital, (2) firms increasing investments in training (Acemoglu and Pischke, 2001;Arulampalam et al, 2004), (3) efficiency-enhancing human resource practices (Hirsch et al, 2015), (4) higher performance standards of the firm, and (5) increased worker effort in response to receiving higher or fair wages (Akerlof, 1984;Owens and Kagel, 2010). As we look at individual engagement as an outcome variable, this mostly identifies effects via the last channel.…”

Section: Effects On Work Engagement and Turnover Intentionmentioning

confidence: 99%

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Do minimum wages increase job satisfaction? Micro‐data evidence from the new German minimum wage

Bossler

Broszeit

2017

Labour

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Section: Discussionmentioning

confidence: 99%

Section: Effects On Work Engagement and Turnover Intentionmentioning

confidence: 99%

Do minimum wages increase job satisfaction? Micro‐data evidence from the new German minimum wage

Bossler

Broszeit

2017

Labour

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“…The effect is even stronger if the same wage level chosen for the wage guideline is set as a (binding) "minimum wage." On the impact of minimum wages on effort in gift-exchange games see also Brandts and Charness (2004) and Owens and Kagel (2010).…”

Section: Introductionmentioning

confidence: 99%

Pay Secrecy and Effort Provision

Nosenzo

2012

Economic Inquiry

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The focus for the Centre is research into individual and strategic decision-making using a combination of theoretical and experimental methods. On the theory side, members of the Centre investigate individual choice under uncertainty, cooperative and non-cooperative game theory, as well as theories of psychology, bounded rationality and evolutionary game theory. Members of the Centre have applied experimental methods in the fields of public economics, individual choice under risk and uncertainty, strategic interaction, and the performance of auctions, markets and other economic institutions. Much of the Centre's research involves collaborative projects with researchers from other departments in the UK and overseas. Abstract:Pay secrecy is often justified on the ground of concerns about the detrimental consequences of intra-firm pay comparisons for work morale and performance. Surprisingly, however, there is only limited empirical evidence that the availability of pay comparison information is detrimental for effort provision. In this paper we study pay comparison effects in a giftexchange game laboratory experiment where an employer is matched with two symmetric employees. We compare effort choices made by employees in a 'pay secrecy' treatment and in two 'public wages' treatments where employees are informed of the wage paid to the coworker. In one 'public wages' treatments the employer can choose both wages she pays to the employees, while in the other treatment the wage paid to one employee is regulated exogenously. We show that pay disclosure can be detrimental for effort provision if employees are treated unequally.

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“…Owens and Kagel (2010) find in a gift-exchange game that minimum wages lead to 2 Falk and Kosfeld (2006) highlight in another paper that "hidden costs of control" may also play an important role in principal-agent settings. Put differently, revoking the freedom of employees may backfire, i.e., employees exert lower effort when principals specify minimum effort levels.…”

Section: Introductionmentioning

confidence: 99%

How Worker Participation Affects Reciprocity Under Minimum Remuneration Policies: Experimental Evidence

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe analyze the role of worker participation for the success of minimum remuneration policies. In our experiments employers remunerate workers doing a real-effort task. We vary the way how a minimum remuneration policy is introduced. In the worker-participation treatment, workers bargain with the employer on the enforcement of the policy. In the control treatment the policy is exogenously introduced. We find a pronounced effort increase after the policy was enforced. An exogenous introduction has detrimental effects, i.e., employers frequently pay a premium to maintain performance. Thus, worker participation may be an effective means for maintaining reciprocity under minimum remuneration policies.JEL Classification: C91, J31, J33, M52

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Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation

Cited by 43 publications

References 20 publications

Do minimum wages increase job satisfaction? Micro‐data evidence from the new German minimum wage

Do minimum wages increase job satisfaction? Micro‐data evidence from the new German minimum wage

Pay Secrecy and Effort Provision

How Worker Participation Affects Reciprocity Under Minimum Remuneration Policies: Experimental Evidence

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