Wage Elasticities in Working and Volunteering: The Role of Reference Points in a Laboratory Study
Christine L. Exley () and
Stephen Terry
Additional contact information
Christine L. Exley: Harvard Business School, Negotiation, Organizations & Markets Unit
No 16-062, Harvard Business School Working Papers from Harvard Business School
Abstract:
We experimentally test how effort responds to wages - randomly assigned to accrue to individuals or to a charity - in the presence of expectations-based reference points or targets. When individuals earn money for themselves, higher wages lead to higher effort with relatively muted targeting behavior. When individuals earn money for a charity, higher wages instead lead to lower effort with substantial targeting behavior. A reference-dependent theoretical framework suggests an explanation for this differential impact: when individuals place less value on earnings, such as when accruing earnings for a charity instead of themselves, more targeting behavior and a more sluggish response to incentives should result. Results from an additional experiment add support to this explanation. When individuals select into earning money for a charity and thus likely place a higher value on those earnings, targeting behavior is muted and no longer generates a negative effort response to higher wages.
Keywords: reference points; wage elasticities; labor supply; effort; volunteering; prosocial behavior (search for similar items in EconPapers)
JEL-codes: D12 D64 D84 H41 J22 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2015-09, Revised 2017-06
New Economics Papers: this item is included in nep-exp, nep-hrm and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
http://www.hbs.edu/faculty/pages/download.aspx?name=16-062.pdf (application/pdf)
Related works:
Journal Article: Wage Elasticities in Working and Volunteering: The Role of Reference Points in a Laboratory Study (2019) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:16-062
Access Statistics for this paper
More papers in Harvard Business School Working Papers from Harvard Business School Contact information at EDIRC.
Bibliographic data for series maintained by HBS ().