Relative Pay and Labor Supply

Relative Pay and Labor Supply

The authors use a laboratory experiment to examine the impact of relative wages on labor supply. They test the hypothesis that, ceteris paribus, making a given wage high (low) relative to other wage levels will lead to an increase (decrease) in labor supply. They find that labor supply does respond significantly to relative pay, and in the expected direction. However, when a strong enough reaso...

Relative Wages and Labor Supply: Emulation, Incentives, or Reciprocity?

Abstract The relationship between inequality and labor supply has gained an increasing amount of attention in recent years. This is due, in no small part, to the rise in both work hours and inequality overtime within the U.S. and relative to other developed countries. This paper investigates the possibility of a causal relationship running from inequality to labor supply. After controlling for ...

Performance Pay, Training and Labor Mobility

Performance Pay, Training and Labor Mobility Market imperfections may cause firms and workers to under-invest in specific training. This paper shows that profit sharing may be a suitable instrument to enhance specific training investments, either by enhancing wage flexibility or by increasing the returns to training. As a result, profit sharing not only increases productivity by means of an eff...

Taxation and Labor Supply Decisions:

Loss Aversion and Labor Supply

Loss Aversion and Labor Supply In many occupations workers’ labor supply choices are constrained by institutional rules regulating labor time and effort provision. This renders explicit tests of the neoclassical theory of labor supply difficult. Here we present evidence from studies examining labor supply responses in “neoclassical environments” in which workers are free to choose when and how ...