Do wage cuts damage work morale? Evidence from a natural field experiment

Sebastian Kube, Michel Andr� Mar�chal and Clemens Puppe (clemens.puppe@kit.edu)
Authors registered in the RePEc Author Service: Michel André Maréchal

No 471, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: Employment contracts are often incomplete, leaving many responsibilities subject to workers� discretion. High work morale is therefore essential for sustaining voluntary cooperation and high productivity in firms. We conducted a field experiment to test whether workers reciprocate wage cuts and raises with low or high work productivity. Wage cuts had a detrimental and persistent impact on productivity, reducing average output by more than 20 percent. An equivalent wage increase, however, did not result in any productivity gains. The results from an additional control experiment with high monetary performance incentives demonstrate that workers could still produce substantially more output, leaving enough room for positive reactions. Altogether, these results provide evidence consistent with a model of reciprocity, as opposed to inequality aversion.

Keywords: Morale; reciprocity; gift exchange; field experiment (search for similar items in EconPapers)
JEL-codes: C93 J30 (search for similar items in EconPapers)
Date: 2010-01, Revised 2011-10
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-lab and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: DO WAGE CUTS DAMAGE WORK MORALE? EVIDENCE FROM A NATURAL FIELD EXPERIMENT (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:471

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