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Volkswirtschaft - Open Access LMU - Teil 03/03 Podcast
Testing a forgotten aspect of Akerlof’s gift exchange hypothesis: Relational contracts with individual and uniform wages

Testing a forgotten aspect of Akerlof’s gift exchange hypothesis: Relational contracts with individual and uniform wages

Volkswirtschaft - Open Access LMU - Teil 03/03 vor 14 Jahren

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Empirical work on Akerlof’s theory of gift exchange in labor
markets has concentrated on the fair wage-effort hypothesis. In
fact, however, the theory also contains a social component that
stipulates that homogenous agents that are employed for the same
wage level will exert more effort, resulting in higher rents and
higher market efficiency, than agents that receive different wages.
We present the first test of this component, which we call the fair
uniform-wage hypothesis. In our laboratory experiment, we establish
the existence of a significant efficiency premium of uniform wages.
However, it is not the consequence of a stronger level of
reciprocity by agents, but of the retrenchment of sanctioning
options on the side of principals with uniform wages. Hence,
implementing limitations to contractual freedom can have
efficiency-enhancing effects.