DOES MANAGERIAL COMPENSATION AFFECT WORKERS' EFFORT?

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Date

2015-11-01

Author

Hesse, Nils
Rivas, Maria Fernanda

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We explore in a two-level gift-exchange experiment whether the managerial compensation influences workers' effort decisions. Firstly, we find that there exists a strong positive relation between own wage and effort levels for the workers, while the managers' effort reaches a maximum for intermediate wages and decreases for very high wages. Secondly, our data suggests that the managerial compensations are significantly negatively correlated with the workers' effort choices: the higher the manager's wage, the lower the effort level chosen by the workers.

Subject Keywords

Managerial compensation, Social preferences, Laboratory experiment, Gift-exchange, Effort

URI

https://hdl.handle.net/11511/65102

Journal

JOURNAL OF APPLIED ECONOMICS

DOI

https://doi.org/10.1016/s1514-0326(15)30013-1

Collections

Economics and Administrative Sciences, Article

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Citation Formats

N. Hesse and M. F. Rivas, “DOES MANAGERIAL COMPENSATION AFFECT WORKERS’ EFFORT?,” JOURNAL OF APPLIED ECONOMICS, pp. 297–323, 2015, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/65102.