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Relative Pay and Labor Supply

Anat Bracha, Uri Gneezy and George Loewenstein ()

Journal of Labor Economics, 2015, vol. 33, issue 2, 297 - 315

Abstract: We examine the impact of relative wages on labor supply in a laboratory experiment. We test the hypothesis that, ceteris paribus, making a given wage high (low) relative to other wage levels will lead to an increase (decrease) in labor supply. We find that labor supply does respond significantly to relative pay, and in the expected direction. However, when a strong enough reason for the relative low pay is given, this difference disappears.

Date: 2015
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