Unfair Pay and Health

32 Pages Posted: 14 Dec 2016

See all articles by Armin Falk

Armin Falk

University of Bonn - Economic Science Area; briq - Institute on Behavior & Inequality

Fabian Kosse

Ludwig Maximilian University of Munich (LMU)

Ingo Menrath

Heinrich Heine University Dusseldorf

Pablo Emilio Verde

Heinrich Heine University Dusseldorf

Johannes Siegrist

Heinrich Heine University Dusseldorf

Date Written: June 1, 2016

Abstract

This paper investigates physiological responses to perceptions of unfair pay. We use an integrated approach exploiting complementarities between controlled lab and representative panel data. In a simple principal-agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. Throughout the experiment we record agents' heart rate variability, which is an indicator of stress-related impaired cardiac autonomic control, and which has been shown to predict coronary heart disease in the long-run. Our findings establish a link between unfair payment and heart rate variability. Building on these findings, we further test for potential adverse health effects of unfair pay using observational data from a large representative panel data set. Complementary to our experimental findings we show a strong and significant negative association between unfair pay and health outcomes, in particular cardiovascular health.

Keywords: Fairness, social preferences, inequality, heart rate variability, health, experiments, SOEP

JEL Classification: C91, D03, D63, I14

Suggested Citation

Falk, Armin and Kosse, Fabian and Menrath, Ingo and Verde, Pablo Emilio and Siegrist, Johannes, Unfair Pay and Health (June 1, 2016). SOEPpaper No. 870, Available at SSRN: https://ssrn.com/abstract=2884028 or http://dx.doi.org/10.2139/ssrn.2884028

Armin Falk (Contact Author)

University of Bonn - Economic Science Area ( email )

briq - Institute on Behavior & Inequality

Schaumburg-Lippe-Straße 5-9
Bonn, 53113
Germany

HOME PAGE: http://www.briq-institute.org/

Fabian Kosse

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Ingo Menrath

Heinrich Heine University Dusseldorf

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

Pablo Emilio Verde

Heinrich Heine University Dusseldorf

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

Johannes Siegrist

Heinrich Heine University Dusseldorf ( email )

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

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