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Reciprocity in Organisations - Evidence from the WERS

Author

Listed:
  • Florian Englmaier
  • Thomas Kolaska
  • Stephen G. Leider

Abstract

Recent laboratory evidence suggests that social preferences may affect contractual outcomes under moral hazard. In accordance with previous research, this paper uses written personality tests for job candidates as a proxy for whether firms care about personality traits of employees, in particular whether these employees are inclined towards reciprocity. Using the British Workplace Employment Relations Survey 2004 (WERS) we find that behavior of employers and employees is consistent with the presence of gift-exchange motives: firms that screen applicants for personality are more likely to pay generous wages and to provide (non-pecuniary) benefits like employer pension, on-the-job training, or job security. Firms likewise benefit from reciprocal employees as they can implement more team-working and are generally more successful. Other modern human resource practises like competency tests or incentive pay only poorly predict these patterns. Moreover, there is no association between dismissals and personality tests, indicating that personality tests do not merely improve the fit between applicant and employer. Hence, we conclude that motivation based on gift-exchange motives remains as the most plausible explanation for our results.

Suggested Citation

  • Florian Englmaier & Thomas Kolaska & Stephen G. Leider, 2015. "Reciprocity in Organisations - Evidence from the WERS," CESifo Working Paper Series 5168, CESifo.
    • Handle: RePEc:ces:ceswps:_5168
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    References listed on IDEAS

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    5. Florian Englmaier & Stephen G. Leider, 2010. "Gift Exchange in the Lab - It is not (only) how much you give ..," CESifo Working Paper Series 2944, CESifo.
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    9. David H. Autor & David Scarborough, 2008. "Does Job Testing Harm Minority Workers? Evidence from Retail Establishments," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 219-277.
    10. Ben-Ner, Avner & Putterman, Louis & Kong, Fanmin & Magan, Dan, 2004. "Reciprocity in a two-part dictator game," Journal of Economic Behavior & Organization, Elsevier, vol. 53(3), pages 333-352, March.
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    Citations

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    Cited by:

    1. Livio, Luca & De Chiara, Alessandro, 2019. "Friends or foes? Optimal incentives for reciprocal agents," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 245-278.
    2. Fahn, Matthias & Schade, Anne & Schüßler, Katharina, 2017. "Gift exchange vs. repeated interaction as a source of reciprocal behavior," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168150, Verein für Socialpolitik / German Economic Association.
    3. Masakure, Oliver, 2016. "The effect of employee loyalty on wages," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 274-298.

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    More about this item

    Keywords

    reciprocity; organisational structure; employee compensation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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