A Cross-Cultural Real-Effort Experiment on Wage-Inequality Information and Performance

Liu-Kiel Hong (), Charles Cadsby, Schenk-Mathes Heike Y. (), Song Fei () and Yang Xiaolan ()
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Liu-Kiel Hong: Institute of Management and Economics, Clausthal University of Technology, Julius-Albert-Str. 2, Clausthal-Zellerfeld 38678, Germany
Schenk-Mathes Heike Y.: Institute of Management and Economics, Clausthal University of Technology, Julius-Albert-Str. 2, Clausthal-Zellerfeld 38678, Germany
Song Fei: Ted Rogers School of Management, Ryerson University, Toronto, ON, Canada
Yang Xiaolan: College of Economics, Zhejiang University, Hangzhou, Zhejiang, China

The B.E. Journal of Economic Analysis & Policy, 2013, vol. 13, issue 2, 1095-1120

Abstract: We conduct a real-effort laboratory experiment to examine how disclosure of information about the pay received by co-workers affects work performance in Germany and China. We employ an individual piece-rate setting in which a piece rate is received for each unit of output successfully produced. We find that receiving information that one’s co-workers are all receiving the same piece rate as oneself has no significant effect on performance compared to non-disclosure. In contrast, learning that one co-worker is receiving a higher piece rate than oneself does significantly affect performance. In particular, receiving such information initially results in a larger performance increase than receiving information that others are all receiving the same piece rate as oneself. However, this performance gap decreases toward the end of the experiment.

Keywords: inequity aversion; experiment; inequality; wage information; real effort; cross-cultural comparison (search for similar items in EconPapers)
JEL-codes: C91 D63 J31 J33 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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DOI: 10.1515/bejeap-2012-0040

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