Reciprocity in Labor Relations: Evidence from a Field Experiment with Long-Term Relationships

CIRPEE Working Paper No. 11-27

41 Pages Posted: 13 Sep 2011

See all articles by Matthieu Chemin

Matthieu Chemin

affiliation not provided to SSRN

Joost de Laat

The World Bank - Strategic Impact Evaluation Fund (SIEF)

André Kurmann

Drexel University - LeBow College of Business

Date Written: September 12, 2011

Abstract

We followed field workers administering a household survey over a 12-week period and examined how their reciprocal behavior towards the employer responded to a sequence of exogenous wage increases and wage cuts. To disentangle the effects of reciprocal behavior from other explicit incentives that occur naturally in long-term employment relationships, we devised a novel measure of effort that not only captures the notion of work morale but that field workers perceived as unmonitored. While wage increases had no significant effect, wage cuts led to a strong and significant decline in unmonitored effort. This finding provides clear evidence of a highly asymmetric reciprocity response to wage changes. Our estimates further imply that field workers quickly adapted to higher wages and revised their reference point accordingly when deciding on reciprocity. Finally, we consider a second measure of effort that was explicitly monitored and found no significant effect to any of the wage changes. This lack of impact illustrates that explicit incentives can easily outweigh the effects of reciprocity and highlights the importance of having a measure of effort that workers perceive as unmonitored when testing for reciprocity in long-term relationships.

Keywords: Reciprocity, Gift exchange, Efficiency wages, Field experiment

JEL Classification: C93, J30

Suggested Citation

Chemin, Matthieu and de Laat, Joost and Kurmann, André, Reciprocity in Labor Relations: Evidence from a Field Experiment with Long-Term Relationships (September 12, 2011). CIRPEE Working Paper No. 11-27, Available at SSRN: https://ssrn.com/abstract=1926209 or http://dx.doi.org/10.2139/ssrn.1926209

Matthieu Chemin

affiliation not provided to SSRN ( email )

Joost De Laat

The World Bank - Strategic Impact Evaluation Fund (SIEF) ( email )

United States

HOME PAGE: http://www.worldbank.org/sief

André Kurmann (Contact Author)

Drexel University - LeBow College of Business ( email )

School of Economics
3220 Market Street
Philadelphia, PA 19104
United States

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