Hesse, Nils
Rivas, Maria Fernanda
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.


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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: