NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Morale Effects of Pay Inequality

Emily Breza, Supreet Kaur, Yogita Shamdasani

NBER Working Paper No. 22491
Issued in August 2016
NBER Program(s):DEV, LS

The idea that worker utility is affected by co-worker wages has potentially broad labor market implications. In a month-long experiment with Indian manufacturing workers, we randomize whether co-workers within production units receive the same flat daily wage or different wages (according to baseline productivity rank). For a given absolute wage, pay inequality reduces output and attendance by 0.24 standard deviations and 12%, respectively. These effects strengthen in later weeks. Pay disparity also lowers co-workers’ ability to cooperate in their self-interest. However, when workers can clearly observe productivity differences, pay inequality has no discernible effect on output, attendance, or group cohesion.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Supplementary materials for this paper:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22491

Users who downloaded this paper also downloaded* these:
Brunnermeier and Sannikov w22343 Macro, Money and Finance: A Continuous Time Approach
Bos, Breza, and Liberman w22436 The Labor Market Effects of Credit Market Information
Levitt w22487 Heads or Tails: The Impact of a Coin Toss on Major Life Decisions and Subsequent Happiness
Gottlieb, Townsend, and Xu w22446 Experimenting with Entrepreneurship: The Effect of Job-Protected Leave
Deaton and Cartwright w22595 Understanding and Misunderstanding Randomized Controlled Trials
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us