Pay Growth, Fairness and Job Satisfaction: Implications for Nominal and Real Wage Rigidity

Theories of wage rigidity often rely on a positive relationship between pay changes and utility, arising from concern for fairness or gift exchange. Supportive evidence has emerged from laboratory experiments, but the link has not yet been established with Öeld data. This paper contributes a Örst step, using representative British data. Workers care about the level and the growth of earnings. Below-median wage increases lead to an insult e§ect except when similar workers have real wage reductions or Örm production is falling. Nominal pay cuts appear insulting even when the Örm is doing badly.


Issue Date:
2013-06
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/270540
Language:
English
Total Pages:
35
JEL Codes:
J33; M52; J28; E24
Series Statement:
WERP 1009




 Record created 2018-04-03, last modified 2018-04-03

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