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The behavioral effects of wage and employment policies with gift exchange present

Owens, Mark F
http://rave.ohiolink.edu/etdc/view?acc_num=osu1149002151

Abstract Details

2006, Doctor of Philosophy, Ohio State University, Economics.
This dissertation examines how the outcomes relating to minimum wage and employment subsidy policies may be influenced by the perceptions that workers have about such policies. The psychological effects of policy have not received much attention in the economics literature. Results are presented from laboratory experiments conducted in order to test the effects of policies in markets where employees have preferences for fairness and reciprocity that go beyond the standard model of rational self interest. Results are presented from experiments that introduce minimum wage restrictions into an experimental labor market characterized by gift exchange between employers and employees. Experiment 1 shows that introducing a minimum wage into an ongoing labor market has an overall positive effect on employee effort characterized by a small, statistically insignificant, negative effect on effort at low wages, and a larger, statistically significant, positive effect at higher wages. However, in comparing a labor market that starts with a minimum wage versus one that does not, the minimum wage results in sharply reduced effort. (i) These differences are entirely consistent with the decision theoretic research on reference point effects and (ii) the response to the minimum wage within an ongoing labor market has greater “ecological validity” for evaluating the likely impact outside the lab. Experiment 2, using payoff functions that make gift exchange more costly relative to Experiment 1 to both employers and employees, confirms that the effects of a minimum wage on effort within an ongoing labor market are unlikely to have an adverse effect on employee effort. Another experiment introduces an employment subsidy into a market characterized by substantial unemployment and significant levels of gift exchange. Then, an employment subsidy is introduced into the market to eliminate the unemployment. The results indicate that the subsidized workers do not respond differently from the unsubsidized workers when the subsidy is introduced. However, workers who are already employed reduce their effort from previous levels when the subsidy is introduced. These results suggest that employee perceptions may play a role when employment subsidies are introduced into labor markets with gift exchange.
John Kagel (Advisor)
Gift Exchange; Minimum Wage; Reference Points; Experiment

Recommended Citations

Citations

  • Owens, M. F. (2006). The behavioral effects of wage and employment policies with gift exchange present [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1149002151

    APA Style (7th edition)

  • Owens, Mark. The behavioral effects of wage and employment policies with gift exchange present. 2006. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1149002151.

    MLA Style (8th edition)

  • Owens, Mark. "The behavioral effects of wage and employment policies with gift exchange present." Doctoral dissertation, Ohio State University, 2006. http://rave.ohiolink.edu/etdc/view?acc_num=osu1149002151

    Chicago Manual of Style (17th edition)

osu1149002151
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© 2006, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.
Release 3.2.12