Worker characteristics and wage differentials: Evidence from a gift-exchange experiment

Florian Englmaier, Sebastian Strasser and Joachim Winter ()

Journal of Economic Behavior & Organization, 2014, vol. 97, issue C, 185-203

Abstract: There is ample empirical evidence indicating that a substantial fraction of the population exhibits social preferences. Recent work also shows that social preferences influence the effectiveness of incentives in labor relations. Hence, when making contracting decisions, employers should take into account that workers are heterogeneous with respect to both their productivity and their social preferences. This paper presents causal evidence that they do. In a real-effort experiment, we elicit measures of workers’ productivity and trustworthiness and make this information available to potential employers. Our data show that employers pay significant wage premia for both traits. Firms make highest profits with trustworthy workers, in particular with highly productive and trustworthy workers. We also document differences in the strength of gift-exchange across worker types. In particular, output levels of trustworthy workers are higher and much less dispersed than those of not-trustworthy workers.

Keywords: Information; Skills; Laboratory experiments; Gift-exchange games; Optimal contracts (search for similar items in EconPapers)
JEL-codes: C91 D86 J41 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Worker characteristics and wage differentials: Evidence from a gift-exchange experiment (2014)
Working Paper: Worker characteristics and wage differentials: Evidence from a gift-exchange experiment (2014)
Working Paper: Worker Characteristics and Wage Differentials: Evidence from a Gift-Exchange Experiment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:97:y:2014:i:c:p:185-203

DOI: 10.1016/j.jebo.2013.06.013

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