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@techreport{NBERw22491,
 title = "The Morale Effects of Pay Inequality",
 author = "Breza, Emily and Kaur, Supreet and Shamdasani, Yogita",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "22491",
 year = "2016",
 month = "August",
 doi = {10.3386/w22491},
 URL = "http://www.nber.org/papers/w22491",
 abstract = {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.},
}