[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/iaa/dpaper/201408.html
   My bibliography  Save this paper

Wage Delegation in the Field

Author

Listed:
  • Sabrina Jeworrek

    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

  • Vanessa Mertins

    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

Abstract
By conducting a natural field experiment, we test whether a managerial policy of allowing employees to self-determine their wages is as successful as recently suggested by laboratory evidence. We find that this policy indeed enhances performance. However, our data is clearly at odds with the conjecture of Pareto improvements, since labor costs grow even faster. Admittedly, the performance change is remarkable given that a considerable pay increase has no effect at all. Surprisingly, the data suggests that explicitly denying parts of the workforce this choice boosts performance, too. Additional experimental and survey data provides important insights into employees' underlying motivations.

Suggested Citation

  • Sabrina Jeworrek & Vanessa Mertins, 2014. "Wage Delegation in the Field," IAAEU Discussion Papers 201408, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    • Handle: RePEc:iaa:dpaper:201408
    as

    Download full text from publisher

    File URL: http://www.iaaeg.de/images/DiscussionPaper/2014_08.pdf
    File Function: First version, 2014
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brandes, Leif & Darai, Donja, 2017. "The value and motivating mechanism of transparency in organizations," European Economic Review, Elsevier, vol. 98(C), pages 189-198.
    2. Philip Mellizo & Jeffrey Carpenter & Peter Hans Matthews, 2014. "Workplace democracy in the lab," Industrial Relations Journal, Wiley Blackwell, vol. 45(4), pages 313-328, July.
    3. Sebastian Kube & Michel André Maréchal & Clemens Puppe, 2013. "Do Wage Cuts Damage Work Morale? Evidence From A Natural Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 853-870, August.
    4. Muriel Niederle, 2007. "Competitive Wages in a Match with Ordered Contracts," American Economic Review, American Economic Association, vol. 97(5), pages 1957-1969, December.
    5. Björn Bartling & Ernst Fehr & Holger Herz, 2014. "The Intrinsic Value of Decision Rights," Econometrica, Econometric Society, vol. 82, pages 2005-2039, November.
    6. Heike Hennig-Schmidt & Bettina Rockenbach & Abdolkarim Sadrieh, 2010. "In Search Of Workers' Real Effort Reciprocity-A Field and a Laboratory Experiment," Journal of the European Economic Association, MIT Press, vol. 8(4), pages 817-837, June.
    7. Regner, Tobias & Barria, Javier A., 2009. "Do consumers pay voluntarily? The case of online music," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 395-406, August.
    8. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 437-459.
    9. Dirk Sliwka, 2007. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," American Economic Review, American Economic Association, vol. 97(3), pages 999-1012, June.
    10. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
    11. Alain Cohn & Ernst Fehr & Lorenz Goette, 2015. "Fair Wages and Effort Provision: Combining Evidence from a Choice Experiment and a Field Experiment," Management Science, INFORMS, vol. 61(8), pages 1777-1794, August.
    12. Ben Irons & Cameron Hepburn, 2007. "Regret Theory and the Tyranny of Choice," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 191-203, June.
    13. Muriel Niederle & Lise Vesterlund, 2007. "Do Women Shy Away From Competition? Do Men Compete Too Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(3), pages 1067-1101.
    14. repec:ner:ucllon:http://discovery.ucl.ac.uk/17678/ is not listed on IDEAS
    15. Christiane Bradler & Robert Dur & Susanne Neckermann & Arjan Non, 2013. "Employee Recognition and Performance: A Field Experiment," Tinbergen Institute Discussion Papers 13-038/VII, Tinbergen Institute.
    16. Jörg Franke & Ruslan Gurtoviy & Vanessa Mertins, 2014. "Workers' Participation in Wage Setting and Opportunistic Behavior: Evidence from a Gift-Exchange Experiment," IAAEU Discussion Papers 201407, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    17. Gary Charness & Guillaume R. Frechette & John H. Kagel, 2004. "How Robust is Laboratory Gift Exchange?," Experimental Economics, Springer;Economic Science Association, vol. 7(2), pages 189-205, June.
    18. Sebastian Kube & Michel Andre Marechal & Clemens Puppe, 2012. "The Currency of Reciprocity: Gift Exchange in the Workplace," American Economic Review, American Economic Association, vol. 102(4), pages 1644-1662, June.
    19. Charness, Gary, 2000. "Responsibility and effort in an experimental labor market," Journal of Economic Behavior & Organization, Elsevier, vol. 42(3), pages 375-384, July.
    20. Emmanuelle Auriol & Régis Renault, 2008. "Status and incentives," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 305-326, March.
    21. Daniel L. Chen & John J. Horton, 2016. "Research Note—Are Online Labor Markets Spot Markets for Tasks? A Field Experiment on the Behavioral Response to Wage Cuts," Information Systems Research, INFORMS, vol. 27(2), pages 403-423, June.
    22. Gary Charness & Ramón Cobo-Reyes & Juan A. Lacomba & Francisco Lagos & Jose Maria Perez, 2016. "Social comparisons in wage delegation: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 433-459, June.
    23. Ernst Fehr & Armin Falk, 1999. "Wage Rigidity in a Competitive Incomplete Contract Market," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 106-134, February.
    24. Alain Cohn & Ernst Fehr & Benedikt Herrmann & Frédéric Schneider, 2014. "Social Comparison And Effort Provision: Evidence From A Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 12(4), pages 877-898, August.
    25. Chen, Daniel L. & Horton, John J., 2016. "Are Online Labor Markets Spot Markets for Tasks?: A Field Experiment on the Behavioral Response to Wage Cuts," IAST Working Papers 16-37, Institute for Advanced Study in Toulouse (IAST).
    26. Michael Kosfeld & Susanne Neckermann, 2011. "Getting More Work for Nothing? Symbolic Awards and Worker Performance," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 86-99, August.
    27. Klaus M. Schmidt & Martin Spann & Robert Zeithammer, 2015. "Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets," Management Science, INFORMS, vol. 61(6), pages 1217-1236, June.
    28. Ernst Fehr & Holger Herz & Tom Wilkening, 2013. "The Lure of Authority: Motivation and Incentive Effects of Power," American Economic Review, American Economic Association, vol. 103(4), pages 1325-1359, June.
    29. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    30. Uri Gneezy & John A List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," Econometrica, Econometric Society, vol. 74(5), pages 1365-1384, September.
    31. Robert Dur, 2009. "Gift Exchange in The Workplace: Money or Attention?," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 550-560, 04-05.
    32. repec:wly:soecon:v:81:3:y:2015:p:538-561 is not listed on IDEAS
    33. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
    34. Gary Charness & Ramon Cobo-Reyes & Natalia Jimenez & Juan A. Lacomba & Francisco Lagos, 2012. "The Hidden Advantage of Delegation: Pareto Improvements in a Gift Exchange Game," American Economic Review, American Economic Association, vol. 102(5), pages 2358-2379, August.
    35. Dawes, Robyn M & Thaler, Richard H, 1988. "Anomalies: Cooperation," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 187-197, Summer.
    36. Marco Faillo & Costanza Piovanelli, 2017. "Wage delegation and intrinsic motivation: an experimental study," CEEL Working Papers 1701, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    37. Alain Cohn & Ernst Fehr & Lorenz Goette, 2013. "Fair wages and effort provision: Combining evidence from the lab and the field," ECON - Working Papers 107, Department of Economics - University of Zurich.
    38. Bowles, Hannah Riley & Babcock, Linda & Lai, Lei, 2007. "Social incentives for gender differences in the propensity to initiate negotiations: Sometimes it does hurt to ask," Organizational Behavior and Human Decision Processes, Elsevier, vol. 103(1), pages 84-103, May.
    39. Uri Gneezy & Muriel Niederle & Aldo Rustichini, 2003. "Performance in Competitive Environments: Gender Differences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 1049-1074.
    40. Franke, Jörg & Gurtoviy, Ruslan & Mertins, Vanessa, 2016. "Workers’ participation in wage setting: A gift-exchange experiment," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 151-162.
    41. Michael Kosfeld & Armin Falk, 2006. "The Hidden Costs of Control," American Economic Review, American Economic Association, vol. 96(5), pages 1611-1630, December.
    42. repec:dau:papers:123456789/12479 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Köhler, Katrin & Pagel, Beatrice & Rau, Holger A., 2015. "How worker participation affects reciprocity under minimum remuneration policies: Experimental evidence," University of Göttingen Working Papers in Economics 267, University of Goettingen, Department of Economics.
    2. José J. Domínguez & Giulio Ecchia & Natalia Montinari & Raimondello Orsini, 2023. "When Workplace Democracy Backfires. Lab Evidence on Honesty and Cooperation," ThE Papers 23/02, Department of Economic Theory and Economic History of the University of Granada..
    3. Christian Brück & Thorsten Knauer & Harald Meier & Anja Schwering, 2021. "Self-set salaries and creativity," Journal of Business Economics, Springer, vol. 91(1), pages 91-121, February.
    4. Marco Faillo & Costanza Piovanelli, 2017. "Wage delegation and intrinsic motivation: an experimental study," CEEL Working Papers 1701, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    5. Vanessa Mertins & Christian Walter, 2021. "In absence of money: a field experiment on volunteer work motivation," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 952-984, September.
    6. Adrian Chadi & Sabrina Jeworrek & Vanessa Mertins, 2017. "When the Meaning of Work Has Disappeared: Experimental Evidence on Employees’ Performance and Emotions," Management Science, INFORMS, vol. 63(6), pages 1696-1707, June.
    7. Franke, Jörg & Gurtoviy, Ruslan & Mertins, Vanessa, 2016. "Workers’ participation in wage setting: A gift-exchange experiment," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 151-162.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    2. Sliwka, Dirk & Werner, Peter, 2016. "How Do Agents React to Dynamic Wage Increases? An Experimental Study," IZA Discussion Papers 9855, Institute of Labor Economics (IZA).
    3. Christiane Bradler & Robert Dur & Susanne Neckermann & Arjan Non, 2013. "Employee Recognition and Performance: A Field Experiment," Tinbergen Institute Discussion Papers 13-038/VII, Tinbergen Institute.
    4. Marco Faillo & Costanza Piovanelli, 2017. "Wage delegation and intrinsic motivation: an experimental study," CEEL Working Papers 1701, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    5. Koch, Alexander K. & Nafziger, Julia, 2016. "Gift exchange, control, and cyberloafing: A real-effort experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 409-426.
    6. Charness, Gary & Gneezy, Uri & Henderson, Austin, 2018. "Experimental methods: Measuring effort in economics experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 149(C), pages 74-87.
    7. Gary Charness & Ramón Cobo-Reyes & Juan A. Lacomba & Francisco Lagos & Jose Maria Perez, 2016. "Social comparisons in wage delegation: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 433-459, June.
    8. Sautua, Santiago I., 2023. "Disentangling the influences of positive reciprocity and mood on gift exchange at work," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 102(C).
    9. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    10. Bejarano, Hernán & Corgnet, Brice & Gómez-Miñambres, Joaquín, 2021. "Economic stability promotes gift-exchange in the workplace," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 374-398.
    11. Michael Kirchler & Stefan Palan, 2018. "Immaterial and monetary gifts in economic transactions: evidence from the field," Experimental Economics, Springer;Economic Science Association, vol. 21(1), pages 205-230, March.
    12. Alain Cohn & Ernst Fehr & Lorenz Goette, 2015. "Fair Wages and Effort Provision: Combining Evidence from a Choice Experiment and a Field Experiment," Management Science, INFORMS, vol. 61(8), pages 1777-1794, August.
    13. Simon Gächter & Esther Kaiser & Manfred Königstein, 2024. "Incentive contracts crowd out voluntary cooperation: Evidence from gift-exchange experiments," Discussion Papers 2024-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    14. Nickolas Gagnon & Charles N. Noussair, 2020. "Reciprocity Under Brief And Long‐Time Delays," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1517-1530, July.
    15. Bogliacino, Francesco & Grimalda, Gianluca & Pipke, David, 2021. "Kind or contented? An investigation of the gift exchange hypothesis in a natural field experiment in Colombia," OSF Preprints xmjaq, Center for Open Science.
    16. Constança Esteves-Sorenson, 2018. "Gift Exchange in the Workplace: Addressing the Conflicting Evidence with a Careful Test," Management Science, INFORMS, vol. 64(9), pages 4365-4388, September.
    17. Lea Cassar & Stephan Meier, 2017. "Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives," NBER Working Papers 24109, National Bureau of Economic Research, Inc.
    18. Gosnell, Greer & Metcalfe, Robert & List, John A, 2016. "A new approach to an age-old problem: solving externalities by incenting workers directly," LSE Research Online Documents on Economics 84331, London School of Economics and Political Science, LSE Library.
    19. Shchetinin, Oleg, 2009. "Contracting Under Reciprocal Altruism," MPRA Paper 13457, University Library of Munich, Germany.
    20. Stefan Palan & Michael Kirchler, 2014. "Friendliness pays off! Monetary and Immaterial Gifts in Consumer-Salesperson Interactions," Working Papers 2014-31, Faculty of Economics and Statistics, Universität Innsbruck.

    More about this item

    Keywords

    Field experiment; Delegation; Reciprocity; Responsibility alleviation; Compensation; Worker empowerment; Workplace democracy;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iaa:dpaper:201408. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adrian Chadi (email available below). General contact details of provider: https://edirc.repec.org/data/iaaegde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.