Clark, Andrew E., Masclet, David and Villeval, Marie-Claire (2008) Effort and comparison income: experimental and survey evidence. CEP Discussion Paper (886). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 9780853282938
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Abstract
This paper considers the effect of status or relative income on work effort, combining experimental evidence from a gift-exchange game with the analysis of multi-country ISSP survey data. We find a consistent negative effect of others’ incomes on individual effort in both datasets. The individual’s rank in the income distribution is a stronger determinant of effort than is others’ average income, suggesting that comparisons are more ordinal than cardinal. In the experiment, effort is also affected by comparisons over time: those who received higher income offers or enjoyed higher income rank in the past exert lower levels of effort for a given current income and rank.
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