Abstract
This empirical study examines the relevance of different work incentive models by distinguishing reciprocity induced by pecuniary and non-pecuniary factors. Although the literature does not present an examination of different models all together but rather specifically examines each model mainly through experimental laboratory games, we study which models are suitable to explain work incentives in real labor markets. Our analyses reveal that overall reciprocity induced by non-pecuniary factors motivates employees well. The shirking model induces effort only if employees face a high level of vulnerability to firing. However, the high level of vulnerability to dismissal invalidates the gift exchange and reciprocity models. These results can complement controlled laboratory experiments, whose results are often restricted in applying to the reality.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
The efficiency wage theory was developed to “explain the presence of unemployment and wage discrimination (Pindyck and Rubinfeld 1995, p.617).”
Intentions in the economics literature are a part of procedural justice and company management in this paper corresponds to interpersonal justice in the area of industrial psychology.
Falk (2007) examines the relevance of the gift exchange model using field experiments, although the subject is donations, not labor relationships.
Charness et al. (2004) show that the effects of gift exchange in the laboratory are sensitive to factors such as game setting and point out that results are not as robust as commonly believed.
Invisibility of achievement is interpreted differently from a reduction in monitoring by supervisors.
The result might be related to those reported by Irlenbusch and Sliwka (2005), which show that transparency (i.e., the degree to which employers observe employees’ efforts) promotes employees’ efforts in the gift exchange game. In our context, employers can judge whether employees work hard or not partly based on the achievement of their work.
References
Akerlof GA (1982) Labor contracts as partial gift exchange. Q J Econ 97(4):543–569
Akerlof G, Yellen J (1990) The fair wage-effort hypothesis and unemployment. Q J Econ 105:255–283
Bolton GE, Ockenfels A (2000) ERC: a theory of equity, reciprocity, and competition. Am Econ Rev 90(1):166–193
Brandts J, Charness G (2004) Do labor market conditions affect gift exchange? Some experimental evidence. Econ J 114:684–708
Charness G (2000) Responsibility and effort in an experimental labor market. J Econ Behav Organ 42:375–384
Charness G (2004) Attribution and reciprocity in an experimental labor market. J Labor Econ 22(3):665–686
Charness G, Frechette GR, Kagal JH (2004) How robust is laboratory gift exchange? Exp Econ 7(2):189–205
Eisenberger R, Huntington R, Hutchison S, Sowa D (1986) Perceived organization support. J Appl Psychol 71:500–507
Eisenberger R, Armeli S, Rexwinkel B, Lynch PD, Rhodes L (2001) Reciprocation of perceived organization support. J Appl Psychol 86:42–51
Ewing BT, Payne JE (1999) The Trade-Off between Supervision and Wages: Evidence of Efficiency Wages from the NLSY. South Econ J 66(2):424–432
Fairris D, Alston LJ (1994) Wages and the intensity of labor effort: efficiency wages versus compensating payments. South Econ J 61(1):149–160
Falk A (2007) Notes and comments gift exchange in the field. Econometrica 75(5):1501–1511
Falk A, Fischbacher U (2006) A theory of reciprocity. Game Econ Behav 54:293–315
Falk A, Fehr E, Fischbacher U (2008) Testing theories of fairness–intentions matter. Game Econ Behav 62(1):287–303
Fehr E, Gächeter S (2000) Fairness and retaliation: the economics of reciprocity. J Econ Perspect 14(3):159–181
Fehr E, Schmidt KM (1999) A theory of fairness, competition, and cooperation. Q J Econ 114:817–868
Gächter S, Falk A (2002) Reputation and reciprocity: consequences for the labor relation. Scand J Econ 104(1):1–26
Gneezy U, List JA (2006) Putting behavioral economics to work: testing for gift exchange in labor markets using field experiments. Econometrica 74(5):1365–1384
Hannan L, Kagel J, Moser D (2002) Partial gift exchange in experimental labor markets: impacts of subject population differences. Productivity differences and effort request on behavior. J Labor Econ 20:923–951
Irlenbusch B, Sliwka D (2005) Transparency and reciprocal behavior in employment relations. J Econ Behav Organ 56:383–403
Maximiano S, Sloof R, Sonnemans J (2007) Gift exchange in a multi-worker firm. Econ J 117:1025–1050
Moulton B (1990) An illustration of a pitfall in estimating the effects of aggregate variables on micro units. Rev Econ Stat 72(2):334–338
Mowday RT, Porter LW, Steer RM (1982) Employee-organization linkage: the psychology of commitment, absenteeism, and turnover. Academic, New York
Nagin DS, Rebitzer JB, Sanders S, Taylor LJ (2002) Monitoring, motivation, and management: the determinants of opportunistic behavior in a field experiment. Am Econ Rev 92(4):850–873
Pereira PT, Silva N, Andrãde e Silva J (2006) Positive and negative reciprocity in the labor market. J Econ Behav Organ 59:406–422
Pindyck RS, Rubinfeld DL (1995) Microeconomics, third edition, New Jersey: Prentice Hall
Rabin M (1993) Incorporating fairness into game theory and economics. Am Econ Rev 83(5):1281–1302
Shapiro C, Stiglitz JE (1984) Equilibrium unemployment as a worker discipline device. Am Econ Rev 74(3):433–444
Author information
Authors and Affiliations
Corresponding author
Additional information
We appreciate Haruka Tanaka and Masao Yamakoshi for their research assistance and acknowledge financial support from a Grants-in-Aid for Scientific Research (No. 22530238). The first author thanks the second author, who kindly provided the data for the analysis. The first author is responsible for any errors related to the analysis of the paper.
Rights and permissions
About this article
Cite this article
Tomohara, A., Ohno, A. What are Relevant Work Incentive Models? Shirking Model, Gift Exchange Model, or Reciprocity Model. J Labor Res 34, 241–252 (2013). https://doi.org/10.1007/s12122-013-9159-z
Published:
Issue Date:
DOI: https://doi.org/10.1007/s12122-013-9159-z