Does it Pay to Be Fair? Evidences from French Firms

24 Pages Posted: 11 Jun 2003

See all articles by Stephane Mahuteau

Stephane Mahuteau

Macquarie University - Economics Department

Date Written: May 2003

Abstract

We propose a direct evaluation of the determinants of gift exchange practices between French employers and employees, estimating the probabilities to observe productivity increases following upon the settlement of rent-sharing agreements in the firm. Whether we estimate the probability for the employer to propose a rent-sharing agreement or the probability for the employees to raise their effort, we show that there exists an endogeneity bias related to the variable chosen as proxy to express the agents' perception of their opponent's fairness. This result supports the hypothesis that French employers and employees' decisions are influenced by reciprocity concerns. Our results concur with Akerlof & Yellen's fair wage effort hypothesis as an explanation of the persistence of non-compensating wage differentials.

Keywords: Workplace relations, Fairness, Reciprocity, Gift Exchange, Productivity, Rent sharing, productivity, probit

JEL Classification: J31, J33, J41, C72, C78

Suggested Citation

Mahuteau, Stephane, Does it Pay to Be Fair? Evidences from French Firms (May 2003). Available at SSRN: https://ssrn.com/abstract=406820 or http://dx.doi.org/10.2139/ssrn.406820

Stephane Mahuteau (Contact Author)

Macquarie University - Economics Department ( email )

North Ryde
Sydney, New South Wales 2109
Australia
612 9850 8489 (Phone)
612 9850 6069 (Fax)

HOME PAGE: http://www.econ.mq.edu.au/staff/position/staff_by_position/stephane_mahuteau

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