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The idea that worker utility is affected by co-worker wages has potentially broad labour market implications. In a month-long experiment with Indian manufacturing workers, in her work with Emily Breza and Yogita Shamdasani (Breza et al. 2017) Supreet Kaur establishes the effects of pay inequality on co-workers within production units. They find that pay inequality reduces output, as well as attendance by 10%. Pay disparity also lowers co-workers' ability to cooperate. However, when workers can clearly observe productivity differences, pay inequality has no discernible effect on output, attendance, or group cohesion.
By VoxDev.org5
1515 ratings
The idea that worker utility is affected by co-worker wages has potentially broad labour market implications. In a month-long experiment with Indian manufacturing workers, in her work with Emily Breza and Yogita Shamdasani (Breza et al. 2017) Supreet Kaur establishes the effects of pay inequality on co-workers within production units. They find that pay inequality reduces output, as well as attendance by 10%. Pay disparity also lowers co-workers' ability to cooperate. However, when workers can clearly observe productivity differences, pay inequality has no discernible effect on output, attendance, or group cohesion.

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