Economic stability promotes gift-exchange in the workplace

Hernán Bejarano, Brice Corgnet () and Joaquín Gómez-Miñambres
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Hernán Bejarano: Centro de Investigación y Docencia Económicas (Mexico, Mexico City) - CIDE
Brice Corgnet: EM - EMLyon Business School
Joaquín Gómez-Miñambres: Chapman University

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Abstract: We extend Akerlof's (1982) gift-exchange model to the case in which reference wages respond to changes in economic conditions. Our model shows that these changes spur disagreements between workers and employers regarding the reference wage. These disagreements tend to weaken the gift-exchange relationship, thus reducing production levels and wages. We find support for these predictions in a controlled yet realistic workplace environment. Our work also sheds light on several stylized facts regarding employment relationships, such as the increased intensity of labor conflicts when economic conditions are unstable.

Keywords: Self-serving biases; Reference-dependent utility; Laboratory experiments; Labor conflicts; Gift-exchange; incentives (search for similar items in EconPapers)
Date: 2021-07-01
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Published in Journal of Economic Behavior and Organization, 2021, pp.374 - 398. ⟨10.1016/j.jebo.2021.04.033⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05614649

DOI: 10.1016/j.jebo.2021.04.033

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