PROCEDURAL UNFAIR WAGE DIFFERENTIALS AND THEIR EFFECTS ON UNETHICAL BEHAVIOR | Zendy

Grosch Kerstin | Zendy; Rau Holger A. | Zendy

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PROCEDURAL UNFAIR WAGE DIFFERENTIALS AND THEIR EFFECTS ON UNETHICAL BEHAVIOR

Author(s) -

Grosch Kerstin,

Rau Holger A.

Publication year - 2020

Publication title -

economic inquiry

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.823

H-Index - 72

eISSN - 1465-7295

pISSN - 0095-2583

DOI - 10.1111/ecin.12906

Subject(s) - payment , economics , wage , inequity aversion , workforce , labour economics , control (management) , inequality , microeconomics , loss aversion , wage inequality , demographic economics , mathematical analysis , mathematics , management , finance , economic growth

In this paper, we investigate how payment procedures that are deemed unfair can spur unethical behavior towards innocent coworkers in a real‐effort experiment. In our Discrimination treatment, a highly unfair payment procedure with wage differentials, half the workforce is randomly selected and paid by relative performance whereas the remaining receives no payment. A joy‐of‐destruction game measures unethical behavior subsequently. Non‐earners in Discrimination destroy significantly more than in the non‐discriminatory control treatments. In Discrimination , unethical behavior is generally high for all non‐earners, independent of individual inequality aversion and relative performance beliefs. In the control treatments, inequality aversion is the main driver of destructive behavior. ( JEL C91, D03, J33, J70, M52)

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