Unfair Pay and Health
32 Pages Posted: 14 Dec 2016
Date Written: June 1, 2016
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: Suggested Citation