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Relative pay and its effects on firm efficiency in a transitional economy

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Abstract

In this study, we examine the impact of relative pay (manager pay divided by average worker pay) on a firm's productivity. Using data from a major transitional economy, China, we find that relative pay is negatively associated with high productivity. Our results provide support for the view that workers are alienated when their incomes are far lower than that of top management and this leads to lower productivity. This effect is most pronounced in labor intensive firms.

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Finance and Accounting


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Source

Journal of Economic Behavior & Organization

ISSN:0167-2681

Year:2015

Volume:110

Page:59-77

ESI Discipline:ECONOMICS & BUSINESS;

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