The effect of wage proposals on efficiency and income distribution
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Abstract
- Pre-play non-binding communication in organizations is prevalent. We study the implications of pre-play, private and public, wage proposals in labor markets. To that end, we develop a theoretical model from which we derive certain hypothesis that we test through a laboratory experiment. In the baseline, that depicts a typical labor market interaction, the employer makes a wage offer to the worker who may then accept or reject it. In subsequent treatments, workers, moving first, make private, non-binding, wage proposals to the employer. In a following treatment, the proposals are made public. Our findings suggest that both private and public wage proposals
promote higher wages, efficiency, and income equality. Public information on wage proposals benefits firms more than workers while, workers benefit more under private proposals where income inequality is the lowest. We find some support in our data on workers conforming to their co-workers’ wage proposals when these are public. Finally, the gender gap observed in the baseline on acceptance rates and workers’ income vanishes when proposals are present.
| Title | The effect of wage proposals on efficiency and income distribution |
|---|---|
| Creator | Gómez-Miñambres, Joaquín |
| Jimenez, N. G. | |
| Ezquerra, L. | |
| Kujal, P. | |
| Publisher | Journal of Economic Behavior and Organization |
| Academic Department | Economics |
| Division | Social Sciences |
| Organization | Lafayette College |
| Date Issued | 2023 |
| Date Available | 2023-12-05 |
| Type | Article |
| Language | English |
| Keyword | Wage proposals |
| Pre-play communication | |
| Ultimatum game | |
| Wage negotiations | |
| Laboratory experiments | |
| Bibliographic Citation | Ezquerra, L. (2023) "The effect of wage proposals on efficiency and income distribution." Journal of Economic Behavior and Organization 216: 469–493. |
| Standard Identifier | DOI 10.1016/j.jebo.2023.10.006 |
| Handle 10385/tm70mw343 | |
| Permalink | http://hdl.handle.net/10385/tm70mw343 |
| Rights Statement |
Creative Commons - Attribution, Non-Commercial
|
| Rights Holders | Gómez-Miñambres, Joaquín |
| Jimenez, N. | |
| Kujal, P. | |
| Ezquerra, L. |
Contains
| File | GomezMinambres-JournalofEconomicBehaviorandOrganization-vol216-2023.pdf | Uploaded 2023-12-05 | Public | Download |
| File | GomezMinambres-JournalofEconomicBehaviorandOrganization-vol216-2023.pdf | Uploaded 2023-12-05 | Public | Download |
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