How Much Does Your Boss Make? The Effects of Salary Comparisons

This examine of more than 2,000 personnel at a multibillion dollar agency explores how perceptions about friends’ and administrators’ salaries impact personnel behaviors and preferences for equity. Workers show a higher tolerance for inequality when career titles differ, which can explain why incentives are granted through promotions, and gender pay distinctions are most pronounced throughout positions.

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We analyze how workers understand the salaries of their peers and professionals and how their beliefs about those salaries have an impact on their particular actions. We done a field experiment using a sample of 2,060 staff from the multibillion greenback corporation. We Mix loaded details from surveys and administrative records with data with the experiment, which delivered some staff with accurate information regarding the salaries of Other individuals. To start with, we document substantial misperceptions about salaries and determine some in their resources. Second, we see that perceived peer and manager salaries have a substantial causal impact on personnel actions. These effects are distinct for horizontal and vertical comparisons. Though better perceived peer salary decreases energy, output, and retention, larger perceived supervisor income features a beneficial impact on those self same results. We offer suggestive proof for the fundamental mechanisms. We conclude by discussing implications for shell out inequality and shell out transparency.

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