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Labor contracts, gift-exchange and reference wages: Your gift need not be mine

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  • Hernán Bejarano

    (Centro de Investigación y Docencia en Economía de México/Chapman University)

  • Brice Corgnet

    (EM Lyon Business School)

  • Joaquín Gómez-Miñambres

    (Lafayette College)

Abstract

We extend Akerlof’s (1982) gift-exchange model to the case in which reference wages respond to changes in the work environment such as those related to unemployment benefits or workers’ productivity levels. Our model shows that these changes spur disagreements between workers and employers regarding the value of the reference wage. These disagreements tend to weaken the gift- exchange relationship thus reducing production levels and wages. We find support for these predictions in a controlled, yet realistic, workplace environment. Our work also sheds light on several stylized facts regarding employment relationships such as the increased intensity of labor conflicts when economic conditions are unstable.

Suggested Citation

  • Hernán Bejarano & Brice Corgnet & Joaquín Gómez-Miñambres, 2021. "Labor contracts, gift-exchange and reference wages: Your gift need not be mine," Working Papers 56, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:56
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    More about this item

    Keywords

    Gift-exchange incentives self-serving biases reference-dependent utility laboratory experiments labor conflicts;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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