DOES MANAGERIAL COMPENSATION AFFECT WORKERS' EFFORT?
JOURNAL OF APPLIED ECONOMICS, vol.18, no.2, pp.297-323, 2015 (SSCI, Scopus)
- Publication Type: Article / Article
- Volume: 18 Issue: 2
- Publication Date: 2015
- Doi Number: 10.1016/s1514-0326(15)30013-1
- Journal Name: JOURNAL OF APPLIED ECONOMICS
- Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
- Page Numbers: pp.297-323
- Open Archive Collection: AVESIS Open Access Collection
- Middle East Technical University Affiliated: Yes
Abstract
We explore in a two-level gift-exchange experiment whether the managerial compensation influences workers' effort decisions. Firstly, we find that there exists a strong positive relation between own wage and effort levels for the workers, while the managers' effort reaches a maximum for intermediate wages and decreases for very high wages. Secondly, our data suggests that the managerial compensations are significantly negatively correlated with the workers' effort choices: the higher the manager's wage, the lower the effort level chosen by the workers.