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.
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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.
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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.
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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
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DOI: https://doi.org/10.1007/s12122-013-9159-z