Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior

Arindrajit Dube, Laura Giuliano and Jonathan Leonard ()

No 24906, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze how separations responded to arbitrary differences in own and peer wages at a large U.S. retailer. Regression-discontinuity estimates imply large causal effects of own wages on separations, and on quits in particular. However, this own-wage response could reflect comparisons either to market wages or to peer wages. Estimates using peer-wage discontinuities show large peer-wage effects and imply the own-wage separation response mostly reflects peer comparisons. The peer effect is driven by comparisons with higher-paid peers—suggesting concerns about fairness. Separations appear fairly insensitive when raises are similar across peers—suggesting search frictions and monopsony are relevant in this low-wage sector.

JEL-codes: D9 D91 J01 J3 J42 J63 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-lab, nep-ltv and nep-ure
Note: LS
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Citations: View citations in EconPapers (17)

Published as Arindrajit Dube & Laura Giuliano & Jonathan Leonard, 2019. "Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior," American Economic Review, vol 109(2), pages 620-663.

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Related works:
Journal Article: Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior (2019)
Working Paper: Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior (2015)
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