Does managerial compensation affect workers’ effort?

Nils Hesse and M. Fernanda Rivas
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Nils Hesse: Albert-Ludwigs-Universität Freiburg

Journal of Applied Economics, 2015, vol. 18, 297-324

Abstract: We explore in a two-level gift-exchange experiment whether the managerial compensation influences workers’ effort decisions. Firstly, we find that there exists a strong positive relation between own wage and effort levels for the workers, while the managers’ effort reaches a maximum for intermediate wages and decreases for very high wages. Secondly, our data suggests that the managerial compensations are significantly negatively correlated with the workers’ effort choices: the higher the manager’s wage, the lower the effort level chosen by the workers.

Keywords: managerial compensation; social preferences; laboratory experiment; giftexchange; effort (search for similar items in EconPapers)
JEL-codes: C92 J33 M12 M52 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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https://ucema.edu.ar/publicaciones/download/volume18/Hesse_appendix.pdf Online Appendix (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:18:y:2015:n:2:p:297-324

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