Journal Article
Pay growth, fairness, and job satisfaction: implications for nominal and real wage rigidity
Publication details
Summary
Theories of wage rigidity often rely on a positive relationship between
pay changes and utility, arising from concern for fairness or gift
exchange. Supportive evidence has emerged from laboratory experiments,
but the link has not yet been established with field data. This paper
contributes a first step, using representative British data. Workers
care about the level and the growth of earnings. Below-median wage
increases lead to an insult effect, except when similar workers have
real wage reductions or when firm production is falling. Nominal pay
cuts appear to be insulting even when the firm is doing badly.
Notes
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