Peer Bargaining and Productivity in Teams: Gender and the Inequitable Division of Pay
43 Pages Posted: 27 Feb 2018 Last revised: 28 Feb 2018
Date Written: February 20, 2018
This paper shows that when teams are allowed to internally allocate rewards, the ensuing peer bargaining process generates inequitable outcomes toward women based in both social processes and distributional preferences. We use risk-adjusted fixed-effect models to identify productivity and peer bargaining traits in 965 workers at 32 large Chinese beauty salons. We identify individual productivity through service and card sales and bargaining through the division of team-based commissions. Although productivity and peer bargaining outcomes are positively correlated, a substantial number of workers have bargaining traits that do not match their productivity. More importantly, we show that women consistently receive bargaining outcomes below their productivity level, while men are consistently overcompensated, and we confirm this disparity using Extreme Gradient Boosted Trees machine learning models. Finally, we build a theoretical model to derive a numerical method of moments solution that shows our results can only be explained by a combination of higher prosociality and lower bargaining power in women.
Keywords: Productivity, Bargaining, Gender, Negotiation, Equity, Fairness, Compensation
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